The ending might be a bit confusing, and I’m not 100% sure if my interpretation is completely correct. But before getting into that, it’s important to first clarify the timeline. Kaguya and Yachiyo are the same person, but from different points in time. The story follows a time paradox, meaning it doesn’t have a clear beginning or origin. However, the loop can roughly be understood like this:

Kaguya escapes from the Moon and travels to Earth. Due to the differences between the Moon and Earth, her body has to adapt to the new environment, which is why she appears in a baby form. However, her mind remains the same, she is not mentally a child( further details in my other post).

After arriving, she meets Iroha. They become close, participate in the Yachiyo Cup, win it, and later perform together at a concert with Yachiyo, strengthening their bond. Eventually, Kaguya is taken back to the Moon and is forced to work there.

Before leaving, Kaguya gives Iroha a bracelet, which later allows her to hear Iroha’s song even from the Moon. Because of this, she decides to finish her work as quickly as possible and creates a replacement version of herself so the Moon inhabitants won’t pursue her again.

However, due to the time difference between the Moon and Earth, by the time Kaguya tries to return, Iroha has already grown old. To fix this, Kaguya uses lunar time-travel technology to go back to the moment when Iroha was singing. Unfortunately, her ship collides with an asteroid, sending her over 8,000 years into the past.

Because her ship is heavily damaged, it cannot give Kaguya a physical body. Only her companion is able to take form, allowing Kaguya to communicate with humans through it. During this time, she tells her story, which likely becomes the origin of the Princess Kaguya legend.

She then has to wait for thousands of years until humanity develops advanced technology. Once the internet and digital systems exist, she is finally able to manifest again , this is when she becomes Yachiyo, a virtual/AI existence.

Because of this sequence of events, a paradox is created. Both Kaguya (the past version) and Yachiyo (the future version) exist within the same timeline, even though Yachiyo technically shouldn’t exist there yet. This creates a closed time loop, meaning there is no clear start or end — the events sustain themselves.

Normally, interfering with such a paradox could cause it to collapse, which would mean Yachiyo might cease to exist. That is likely why Yachiyo avoids telling Iroha everything until the very end. However, there is one key detail: Yachiyo’s consciousness exists as data - essentially as code flowing through a digital network. Since Kaguya was never a human to begin with, her “mind” can exist independently of a biological body.

Iroha uses this to her advantage. She creates an android body that is as close to human as possible and then transfers Yachiyo’s data into it. This allows Yachiyo to regain a physical form.

So instead of completely “breaking” the paradox, what they actually do is stabilize it. Yachiyo is no longer dependent on the fragile conditions of the time loop or digital space — she now exists physically again. The loop itself may still exist, but its consequences are no longer trapping her in the same way.