The ending of The Haunting of Bly Manor reveals that the entirety of the story being told is not only that of Bly Manor’s numerous ghosts, but a very special ghost — someone dear to the narrator’s (Carla Gugino) heart. After learning how possession works, Dani bravely invites Viola to possess her to keep her from continuing her rein of terror at the manor, however, this comes with a great personal cost. While, for the time, she is able to go on and continue her life with Jamie—and the two even marry to the extent they’re allowed by law—Dani is cursed by time. Eventually, Viola’s spirit will take her over; she makes it clear that she doesn’t want Jamie to be around when that happens. It’s a difficult decision for her to make, but one that proves her selflessness and her dedication to keep those she loves safe, no matter what she has to sacrifice.
Though Dani made her decision to be possessed in order to save Flora’s life, her happiness is always shadowed by the inevitable and, one day, she makes her return to Bly Manor, then willingly drowns herself in the lake. This has two results: Viola’s spirit is no longer a threat, and the other ghosts are at peace, but Dani must stay there forever. However, as proven by the story that Jamie tells at Flora’s wedding, ghosts never really stay dead so long as they exist in the hearts of those who love them.
Originally from https://screenrant.com/haunting-bly-manor-every-ghost-explained/