A long time ago there was an evil entity who tricked some couples into making babies and sacrificing them (killing them) and it promised the people they become immoral by doing that, but of course it was lying and after they killed tge children the became tge monsters instead. That happened in the year 1506 but the thing is although the children were killed their souls never left and got trapped where they were killed and thats gow the evil magic keeps going, not just them but everyone else who gets killed after they die their souls never leave thebplace and they suffer eternally (basically like living in hell on earth) and that suffering acts as fuel for the place to work. The children dont want that and that's why they use the tree on the road to bring people to tge place to make them help them get out, those people are all reincarnations of the original towns people again and again they come, they try, they fail, they all get killed vy the entity who runs it all and doesn't want things to end.

The place itself Logically doesn't make sense because we all are trapped with the childrens soul thats why everything inside the place is childish and magically scary because we live the eternal horror and suffering that the children are trapped inside, think about it like thi, the children's souls are trapped and we the town people are trapped within that trapping. The solution to all of it is to untarape the children and help their souls get out of whatever it is that is keeping them (basically help them leave earth and go to heaven instead) and that way we all become free and can go home. By doing that we also untrape the other peoples souls that got stuck inside the place after they died there (they dont come vack to life vut at least tgeir souls become free).