Warning: MAJOR SPOILERS ahead for The Haunting of Bly Manor.
Like its predecessor, The Haunting of Hill House, Netflix's spooky new series The Haunting of Bly Manor has a distinctly bittersweet ending. As the storyteller at a wedding rehearsal brings her ghost story to an end, the epilogue of the series reveals exactly who the bride, the storyteller, and the other members of the wedding party are.
The Haunting of Bly Manor's season finale, "The Beast in the Jungle," begins with Dani still in peril after being grabbed by the lady of the lake - revealed in the series' penultimate episode to be Viola Lloyd, Bly Manor's original restless spirit. Viola periodically rises from her watery resting place to walk into Bly Manor and return to her old bedroom in search of her daughter, and anyone unfortunate enough to get in her way is grabbed, strangled, and dragged down into the lake.
After Hannah tries and fails to stop the oblivious ghost, Flora manages to persuade Viola to release Dani by sitting on the bed in the forbidden wing of Bly Manor. The sight of her stirs a memory in Viola's mostly-empty mind of her own daughter, and she releases Dani in order to pick up Flora. As she carries Flora back to the lake (almost killing Lord Henry when he tries to stop her), the window of time to save Flora rapidly closes - until Dani's forced to do something drastic: invite the lady of the lake into herself.
How Dani Saved Flora (& Freed Bly Manor's Ghosts)
In The Haunting of Bly Manor's second episode, "The Pupil," Miles remembers a Bible story told to him by his teacher at boarding school, about the exorcism of the Gerasene demoniac. The story tells of how Jesus exorcised the demons known as Legion from a man (or two men, depending on the gospel) by inviting the demons to move into a herd of pigs, which then drowned themselves in the sea. Miles picks out the most important detail of the story: that the demons had to be invited in, and that therefore the possessed man must have offered them an invitation. Father Stack confirms this, saying, "Evil exists, and we are tempted. But we are not compelled."
The lesson of this story returns in the details of how Peter Quint and Rebecca Jessel plan to take possession of Miles and Flora. By forcibly "tucking away" the children they are able to achieve a partial and temporary control of their bodies, but they can't take complete possession. In order to fully take hold, the host must willingly invite them in with the phrase, "It's you, it's me, it's us." This total possession is signified by the sudden onset of heterochromia - one eye turning a different color, to show that there are two souls in one body.
When Peter was invited into Rebecca and Miles he immediately had complete control of their bodies. However, when Viola is offered possession of Dani's body, Dani initially remains in control even though one of her eyes changes color as a sign of Viola's presence. It's not explicitly explained why Dani is able to stay dominant for ten years after being originally possessed, but it could be because Peter was freshly dead and still had all of his memories, whereas Viola was merely a faceless shadow of her former self.
It's explained in The Haunting of Bly Manor episode 8, "The Romance of Certain Old Clothes," that Viola's repeated refusals to accept death when it came for her caused death to stop coming to Bly Manor. Her stubbornness and disinterest in peacefully moving on trapped Viola at Bly when she did eventually die, and created a gravity well that caused everyone else who died on the property to be trapped there as well. After Viola is invited into Dani's body, her hold over Bly Manor is lifted and all the other ghosts - including Rebecca, Peter, and Hannah - are finally allowed to move on.
Why Dani Drowned Herself
The title of The Haunting of Bly Manor's finale, "The Beast in the Jungle," is taken from a Henry James story about a man who is haunted by a certainty that he is doomed to meet with some kind of catastrophic fate. He's so afraid of this that he resolves never to get married or allow himself to get close to any woman, so that no one else will be drawn into his terrible destiny. There is a woman who loves him deeply, but he keeps her at a distance and she eventually dies with their love unrequited. When visiting her grave, the man comes to a horrifying realization (a quote from this passage, "The beast had lurked indeed, and the beast, at its hour, had sprung," is used in The Haunting of Bly Manor's finale): the "beast in the jungle" that the man had feared his whole life was the doom of throwing his life away and never doing anything with it, or allowing himself to be loved, because of his irrational fear.
After seeing Viola's face in reflections and feeling herself slipping away, Dani eventually makes the decision to return to Bly Manor and drown herself after waking up from a dream with her hand close to Jamie's throat. It appeared that the lady of the lake was finally emerging and about to take over Dani's body, with potentially homicidal results. By returning to Bly and drowning herself in the lake, Dani made sure that Viola would once again be trapped on the property (like Jesus drowning the demon-possessed pigs in the sea). However, she also merged their two spirits so that the lady in the lake was both Viola and Dani, and would therefore walk the grounds of Bly harmlessly rather than murdering anyone in her path.
The use of the "Beast in the Jungle" reference in The Haunting of Bly Manor adds a certain ambiguity to the finale. Unlike the man in the story, Dani didn't hold back from loving Jamie or being loved by her, and the two of them even got married. Though their time together was relatively short, they still made the most of it. In Dani's case, her fear of "the beast in the jungle" seems to have been a legitimate one, since there is a real threat (Viola's emergence) that eventually makes itself known. It's possible that Dani's sense of fear and foreboding is what allowed Viola to start taking over her mind, and there might have been a way to live out the rest of her life with Jamie. However, The Haunting of Bly Manor frames the emergence of the beast as something that cannot be stopped (much like Owen's mother's dementia), and Dani's final act as one born out of love for Jamie.
Why Flora Didn't Recognize The Bly Manor Story
The Haunting of Bly Manor's epilogue confirms what a lot of viewers may have already guessed: that the storyteller is Jamie, the wedding guest who gave the speech at dinner is Owen, and the bride is Flora. The series' prologue and epilogue are set in 2007, twenty years after the events of the main story. When Jamie and Dani go to dinner at Owen's restaurant, he tells them that Flora and Miles (now in their late teens) no longer remember anything that happened to them at Bly Manor. All they remember is that there was a house at Bly where they used to stay in the summer, but the story of the valet, the au pair, and the two ghosts that haunted them are forgotten.
Despite this, viewers may wonder why neither Flora nor Miles recognize the story of their childhood, or at the very least the names of the characters in it. This is explained when another wedding guest asks Jamie if she could go to England and visit Bly Manor, and Jamie replies that there is no place called Bly Manor. This doesn't mean that she made the story up; what it actually reveals is that she changed the name of the haunted house, and therefore of the people in the story as well. The adult Flora doesn't even appear to remember that she knew Owen and Jamie when she was a child, and instead only knows them as friends of Lord Henry; when she points out the curiosity of her middle name being Flora, just like the girl in the story, she adds, "But then I figured, how could you know that?"
What The Haunting of Bly Manor's Final Scene Means
The Haunting of Bly Manor develops the mythology of its ghosts more than The Haunting of Hill House, establishing rules about why they come to be trapped at Bly Manor, how they can interact with the physical world and force themselves to be seen, and how they can take possession of people. However, the series also creates a blurred line between ghosts like Viola, Peter and Rebecca, and manifestations like Dani's visions of Edmund in mirrors, or the creepy doppelganger that torments Henry in his office. This distinction explains the final shot of The Haunting of Bly Manor, in which Dani's hand is seen resting on Jamie's shoulder while she sleeps.
In closing her story, Jamie explains that the version of Dani that became the lady of the lake will have forgotten who she is, and the details of her life with Jamie. However, the real Dani will live on through Jamie's memories of her, and it's that "ghost" that's seen at the very end of The Haunting of Bly Manor. Just like she did in the first episode, Jamie leaves her hotel room open a crack and sleeps in a chair facing the door. This again brings things back to the idea of inviting spirits in: a person can invite demons and evil into themselves, but they can also invite in more benevolent spirits. Even many years after Dani's death, Jamie still leaves an open invitation for her return, and because of this Dani is never really gone.
There's also another possible explanation of the final shot: that when Jamie called out "you, me, us" to Dani in the lake at Bly Manor, she did succeed in inviting a small part of Dani into herself, and that's the part that's seen with her in the hotel room. Ultimately it's left to the audience to decide how literally they want to interpret that last scene - and which explanation is the more romantic one.