This review may contain spoilers. I can handle the truth.
Jonathan Maack’s review published on Letterboxd:
This review may contain spoilers.
Here's my analysis of the film, I haven't watched any interpretation videos and haven't read a lot of stuff about it, and this is my personal interpretation. I believe that the film is very open for different sorts of interpretations so mine isn't THE definite one but for me it perfectly works. I can recommend re-watching the film with the following in mind.
Diane Selwyn (Naomi Watts) comes to Hollywood and wants to become a famous actress. She doesn't get big roles, is relient on others, mostly the successful actress Camilla Rhodes (Laura Harring) who she has an affair with, and who helps her to get a few small parts in her films. Camilla plays with her feelings, though and is actually engaged to her director Adam (Justin Theroux). Diane is so full of jealousy that she hires a hitman to kill Camilla.
That's the part you see in the end of the film. The bigger part is her dream, it's a wonderful world where Hollywood is clean, the weather is good, there's no traffic, everyone's nice to her, her audition goes perfectly, Camilla (now called Rita) is completely helpless and relient on her. There are bad things in Hollywood, pressure by producers, ... but these only happen to others, in this case the cause for her jealousy in the real world, the director Adam.
In the beginning Diane (as Betty) meets the elderly couple and they talk about her dreams that she wants to become a famous actress on the big screen. There's a fairly creepy scene when the couple drives away in the car, it's as if they knew what she's getting into, that they know more about Hollywood than Diane does, but again not everything in a Lynch film is explainable.
In the end though, Diane has failed. She's sad, pathetic, jealous, rundown... She feels guilty, and my personal opinion is that she feels guilty about killing Camilla, but more because she failed. That's why the old couple returns and terrorises her until she kills herself. They stand for the people who put their hopes in Diane, and she failed, and she feels guilty towards them (not only them, but everyone she wanted to impress and show that she can succeed in Hollywood). So she sees no other way out than kill herself.
The dream in the first half of MD might be a dream she has right before killing herself, but I think it's more than that, because it's a mix of her feelings and dreams at that point and her expectations before she comes to Hollywood. It's also a satire on Hollywood in general, showing a reversed world.
When she wakes up you realise that it was all just a dream, that reality isn't that flowery world shown before, and she realises that slowly before waking up. There's the Club Silencio scene and the scene right after that symbolise her waking up.
I love this twist and it fills me with infinite sadness, because first you see her dreams and hopes and then you see what she had become, and it's depressing. Naomi Watts' brilliant performance, one of the best of all time, increases the emotional impact for me.
Absolute masterpiece and my favourite film of all time. I watched it 4 times in a week and it helped me to understand it much better.