"Skinamarink" is the name of the entity that torments the family.
It is a supernatural entity known as a "trickster". The movie is what Kevin perceives is happening during the sleepwalking stint mentioned at the start.
Kevin is aware he's home, but without the full faculties he would have while awake, his trajectory of the house is off. This is why landmarks of the home seem to disappear. The Arc Words "go to sleep" are one of his parents or Kaylee telling him to go to back to bed, but most of the other dialogue (and the entity) is fabricated by his dreaming. His sticking a "knife" in his eye could have been him jabbing himself with a more harmless object, and this is misinterpreted by Kaylee as an injury from his fall down the stairs, which is what actually happened after he "walked on the ceiling". The entity is actually the mother, tainted by a great evil.
As Wendigoon proposed, this may be the result of the mom being involved in some sort of cult, or perhaps she was a witch/overindulged in black magic (hence the Hansel and Gretel type story) and unintentionally became corrupted by dark forces. She was likely out of the picture for a while, and has now returned to torment the souls of her children. This makes the title "Skinamarink" even more perverse, as it is an old song a mother would sing to her kids proclaiming her love for them. A sad theory indeed.The entire film is from Kevin's perspective as his abusive father first kills his mother, and then Kaylee.
This is a theory I already popping up in several places but I'll elaborate here. First of course, is the story Kevin's father gives to someone over the phone that he "fell down the stairs." That is something you commonly hear from abusive parents to explain the bruises and scars on their victims. The movie opens with one of the kids, Kaylee I think, having been hiding inside the closet un the father goes to bed in his room, which strongly suggests that they were hiding from him and waiting until he went to bed. There's the fact, as discussed by many critics and audience members, Kevin and Kaylee are simply acting FAR too calm and unconcerned about all the freaky shit going on in the house. Sadly, on of the symptoms that abused kids display is this similar unresponsive, uncaring stance towards things or events that would shock or horrify others, because they are already so used to shock and horror in their own lives. All the strange happenings and supernatural things happening is simply how Kevin, being so young, rationalizes things in his 4 year old mind. The doors and windows disappearing is his father boarding them up to keep the kids inside. Them sleeping downstairs and not wanting to go upstairs anymore is because they heard or perhaps even saw their father abuse and eventually murder their mother, but the trauma of that made Kevin repress it so now he just thinks his parents are just "missing." Finally, the evil entity itself is Kevin's father. Abused children often come to believe that their parents suffer from split personality, because in public or at other times they will be nice to them and treat them lovingly. When Kevin's father is nice to him or normal, he just sees his father. But when he is becoming abusive, instead he becomes the Entity, an all-powerful, all-controlling malevolent presence that is everywhere in the house, that can "do anything" as it claims, because abused people often do end up believing that their abusers are all-powerful and always watching them, even when they should know better. The toilet disappearing was Kevin's dad removing it to punish or torture the kids further.Alternatively, the film is Kevin's Adventure in Comaland.
The fall down the stairs at the beginning of the film actually knocked Kevin into a coma, and the rest of the film is his brain interpreting the events happening around him from what limited information his senses can pick up on. Coma awareness is a very real thing, and your brain can create all manner of odd scenarios from the scrambled input it's getting. However, this wouldn't explain the shift to Kaylee's focus for a significant part of the film. The entity is also a child.
- This article
goes into greater detail. It seems to enjoy cartoons and repeats them adnauseum long after they’re funny. It gets angry with the kids for not “playing” the way it wants them to, and later intentionally keeps Kaylee away from Kevin seemingly to have him to itself and to punish Kaylee. It takes away their toys by keeping them on the ceiling, and, despite being a Reality Warper who could theoretically shift reality in any way it wants, it chooses to repeat the same boring, sterile process of going to bed every night. So, what else has a short attention span, gets easily irritated when others ignore it or don’t play how they want, hoards toys so others can’t play with them, and is content with a strict routine? A child!- The entity, while powerful, never demonstrates any real higher intelligence more than the kids it’s torments; it’s dialogue is usually just as simplistic and basic. The entity’s obsession with its “playthings” also makes more sense from this angle: presumably, if it were malicious, it would be much more transparent about its torment of the kids, rather than the subtle, mind-shattering boredom from lack of stimulation and repetition. After all, an adult would be much more creative in its torment, while getting easily bored with the same thing over and over. A child has the attention span perfect for tormenting members of a Time Loop.
- This is also why it says “I love you” to Kevin; it is sincere, but it loves Kevin like a toy, not a person.
- This also creates another horrifying possibility; if this entity is a child, whose to say that an “adult” version doesn’t exist somewhere?
The Entity is like The Room in 1408
There is no demon, there is no ghost, there is no poltergeist. It's just "an evil fucking [house]."- This could tie into the above theory, where The Room is an adult version of The Entity.
The house is purgatory for Abusive Parents.
This is similar to the theory where the Entity is an abusive parent. In life, Kaylee and Kevin were Abusive Parents who abused their kids in ways similar to what we see in the film (boarding up doors and windows, blocking access to the toilet, etc.). Eventually, they went too far and seriously injured (or even killed) one of the poor children (possibly by forcing them to stab themself in the eye). When they had no good enough excuse to mask it, they were finally exposed, sentenced to life imprisonment, and later died in prison. The whole nightmarish scenario was designed to punish them for their actions by putting them through something even worse. Kaylee and Kevin were de-aged into children, and after a while of a seemingly normal life to ensure they wouldn't realize the truth, that's when they were placed in a nightmarish version of their house, where the Entity then started tormenting and torturing them in nightmarish ways related to the ways they abused their children, but even worse than they ever imagined. It's possible that Kaylee and Kevin's eternal torment will finally stop if they can come to terms with what they did, and learn to be nice. Then again, the Entity probably wouldn't care. Bonus points if one of their kids died, and the Entity is the kid's ghost, which tacks onto one of the above theories.