I think it's kinda implied that it's just a dream that MalO created and the world ended, but it's left open to interpretation so you can explain it in any different way.
There's a soundtrack missing from the in-game track list. It's the one that plays in the true ending after you let MalO go, I found it in the files and it's called Tense_Music. The in-game track list only has 13 tracks, while there are 14 tracks in the game files.
So I looked through the game files and happened to find a labyrinth area for the game. Is that available in the currect version or was it just never finished?