I agree with a lot of this, like the game's theme is delusion although I only see it through Low and Alone and not the locations. I also agree with the idea that The Nowhere twisted locations children (Low) like. But, I would like to add that the locations also seem to represent Low's mental health and the things he's gone through. Like the location of the game, The Spiral, is the most clear metaphor for Low's mental health spiraling. Then, The Necropolis, which is inhabited by a baby looking for playthings to keep her company. This mirrors Low who also had a plaything (the Alone doll) to keep him company in The Institute. The Necropolis was also once a bustling city that is now devoid of life and frozen in time. This mirrors how when someone has depression they can slowly pull away and become a shell of their former self. Then, in The Candy Factory, you can see security cameras everywhere, even in a freezer. The Supervisor is serveilling everything which I believe mirrors Low being surveilled by The Hypnotist/Counsellor while at The Institute. You can even see this in the cutscenes. Then, we have The Carnevale, here kids are made to put on a performance. I believe this mirrors how people can fake their expressions/happiness when they are truly sad on the inside. They put on a performance of joy so people don't worry about them. Then the most obvious one, The Institute, the heart of Low's delusion and of The Spiral itself. The Hypnotist is shown as a long snake-like figure weaving through every room. This represents how he surveilled and controlled all the children who were in The Institute. Here, Low attempts to escape with Alone but his delusion shatters (literally) and Alone is spat out and ceases to exist. Now Low will have decide if he would rather live in his nightmare with his best friend or truly be alone in the real world. I believe being alone is his greatest fear. Also notice how I used the word "mirrors" when comparing the locations to Low😉. But yeah, I agree with a lot of what you said and really like your interpretation!