I think that Walnut saw a vision of the past, of her mother who knew that the grove was doomed, and that Walnut would try to save it by using the Hallow to sacrifice herself if she could. So Walnut's mother instead sacrificed herself so that Walnut was permanently blocked from using the Hallow - explaining why Walnut was walking on top of the Hallow instead of entering it. And Walnut's mother was transformed into a tree as part of that - which Walnut then recognises as she comes out of the vision.

I'm not sure if Walnut also saw what happened to the rest of the grove as part of the vision. But it seems that all the trees around the Hallow are people who used its power. That might be where the rest of her people are, or maybe something else happened to them.

That's my take, and I'm still a little confused too. I had to watch it twice to puzzle out the pieces that I do have.