Warning: Jumbo spoilers for the game below. You have been warned.
The Sergeant At Arms is the representation of the leader of the Harvesters.
He programmed himself into the simulation, who knows the most about the Harvesters' goals and aims, so therefore it would make sense to make the character in the simulation the leader of the Harvesters.
The Lodge is drawing from Steve's memories and subconscious while the town is designed by the developers.
The town is pre designed by the Harvesters and everyone who goes into the town will either be turned into a serial killer like Steve or be in Stephanie's position ie locked in a room and only being there as a final sacrifice. Everyone meets the same characters and the same situations will happen ie getting tasks from Sergeant at Arms, Pottsham kidnapping the girl, Edna's suicide, Mr Johnson's car getting scratched etc. Everyone in Harvest is designed to be a weirdo, so therefore whoever goes through Harvest will feel that it would be okay to kill them because they are going to do society a favour, so it puts them in the mind of a serial killer,m preparing them for the Lodge.
Then, when you get into the Lodge, it draws from the victim's memories and portrays them in the Lodge, only this time, the participant (Steve) is seeing them from the same perspective that he gained in the town, ie everyone is a weirdo and it would be beneficial to kill them. So, for example, Steve probably had a relative or knew someone who was a war veteran, so one appears in the Lodge, only this time, he gets attacked so he kills that person, desensitizing him even more because. He probably once had to go return a book once from a guy called Cain (I think that's his name), so there's a library subplot, except it ends with the other guy dead. Steve may have been frightened by a clown at one of his birthdays, so he kills the clown. That's why its so disjointed and uneven; its literally just throwing out memories from Steve's subconscious. Everyone's experience in the Lodge is different; if you or I were to go through the Lodge, then it would be our memories that are portrayed, except only more abstract. Its the transition period between the crazy world of Harvest and the real world; without it, Steve couldn't handle killing someone without drawing his own life experiences into the simulation, making it feel more personal and real to him.
Similar to the above theory, but the town is drawn from memories while the Lodge is pre-programmed.
The people in Harvester are based on people Steve knows and are in fact caricatures of his own interpretation of them. Hank is actually a normal kid who likes older shows, but Steve sees him as constantly in front of the TV. Mr Pottsdam is actually based on Stephanie's father, who is likely just very friendly and affectionate, so Harvester twists this as him being a paedophile. Steve does live in a small town that doesn't have much crime, so he sees the law as ineffectual. His father was probably a workaholic or was suffering from some disease and the whole mother abusing the father thing could also come from Steve walking in on his parents as a child and assuming his mother was hurting his father, but when he later learnt about sex, he made the conclusion they were into BDSM.
By going this route, the lodge creates a world Steve is somewhat familiar with and sees as normal to some degree, thereby making it easier to convince him that he is a serial killer at heart and the world is as twisted as he is in the end.
The Harvesters are Aliens.
Advanced Technology years beyond human abilities, The skills to keep said technology hidden. The Colonel's ranting about aliens.
Why would real humans want to make serial killers? Plus the The 50's movie tone and music that was from an era chalk full of alien invasion movies. The crop circles in the intro. It makes more sense than a random evil human group, Not that the game is meant to be logical.
