Guillermo Del Toro's “Pan's Labyrinth” (actually “the labyrinth of the faun” if you translate the title literally) operates on several levels at once. It's a relentless, bleak, depressing story of a little girl caught up in the brutal aftermath of the Spanish Civil War, when her mother marries a Fascist commander tasked with crushing the remnants of guerilla resistance up in the mountains.
It's also a heartbreaking story of mental illness, as she attempts to escape the terrible reality of her life by retreating into a fantasy world in which she must carry out magical quests for a sinister yet compelling faun.
And then it's a fairy tale. You see, she's not really a little girl at all- she's a fairy princess who has lost her memories, and the faun has been sent to determine whether or not her stay in the human world has tainted her beyond redemption.
Any attempt to pick one of these three explanations as the “real” one would be missing the point. They're all the real explanation. She's a lonely little girl caught up in a war, she's delusional, she's a princess in exile. All three levels of reality operate at the same time, and with equal validity.
The result is a movie as poetic, as sorrowful and as beautiful as any other I can remember seeing. I'm not sure how many times I will want to see it again, because it's just too sad- but everyone ought to see it at least once.