When Stranger Things first premiered, it introduced audiences to multiple unnerving mysteries that seemed to have no real answer. Why was Will the one to be kidnapped? What was the real source of Eleven's superpowers? What really is the Upside Down? For many years, we couldn't do anything but sit back and ask ourselves these questions over and over again with no real explanation in sight. But, at long last, we have some concrete answers.
Stranger Things Season 5 Episode 4 revealed that Will was kidnapped because he was "weak" and "easily broken". Furthermore, Episode 5 explained that Dr. Martin Brenner's Project MKUltra consisted of infusing pregnant women with Henry Creel's blood, explaining why their children would have special abilities like telekinesis and telepathy since birth. The mystery of the Upside Down took a little longer to be unraveled, but at long last, it was Dustin who pieced everything together and discovered a horrifying truth.
The Upside Down is a wormhole connecting Earth to another place
Back in Stranger Things Episode 5, Dustin theorized that the Hawkins National Laboratory in the Upside Down housed an energy shield—a device created by dark magic and used by Vecna to prevent anyone from reaching him or Holly. Steve, Nancy, and Jonathan were all tasked with finding and destroying this shield, and the mission almost proved to be successful. Jonathan and Nancy came across a mysterious sphere that's virtually invisible to the naked eye. Assuming it was the energy shield, Nancy shot it, but that action came with a great cost.
See, for what feels like the first time in an eternity, Dustin's theory was wrong. Vecna didn't create an energy shield using dark magic. The sphere that Jonathan and Nancy stumbled upon happened to be exotic matter, which is a key ingredient in theoretical physics needed to keep a wormhole stable once it has formed. So, this whole time, the Upside Down has been a wormhole that connects Earth with a distant place (called Dimension X in Stranger Things: First Shadow), as foreshadowed by Professor Clarke's class on Einstein-Rosen bridges.
The mysterious wall that surrounds the entirety of the Upside Down is simply the wormhole's physical delimitation. This would also explain why the mysterious place is a mixture of Hawkins and Dimension X, since it bridges the two places together. Besides, it would also explain why it is frozen in time, since it is quite literally a fissure in spacetime. Unfortunately, since exotic matter is needed to keep the wormhole stable, and Nancy just shot it, unforeseen effects took place.
Energy waves rippled through the entirety of the Upside Down, hitting the circular wall that encloses it and creating a fissure that started to suck everything in its path and launch it into space. Hopper, Eleven, and Eight were almost caught by this opening in the wall, but they managed to escape to Earth through a small fissure in the ground of the Upside Down. While they managed to get to safety relatively easily, the same cannot be said for Jonathan and Nancy, but more on them later.
Max and Holly find the way out of Camazotz
So far, Max nearly managed to escape Camazotz twice: Once by following her own trail of memories of when Vecna first cursed her, and the other by following Holly's trail of memories of when she first met Mr. Whatsit. However, Vecna managed to interfere in both instances at the very last minute and forced Max to go back to square one and return to the cave. By that point, Max decided it was better to wait until someone rescued them, but Holly had another idea.
See, Holly theorized that traumatic memories lead to a way out of Camazotz, and since Henry is deeply scared of the cave, perhaps the place houses another traumatic memory too. She then convinces Max to venture outside of the cave and into the desert in search of something that could get them out. While Max isn't sure the idea will work (since she herself had already explored the desert outside), she follows Holly's footsteps. Eventually, after a bit of wandering, Holly uses the looking glass that was in Mr. Whatsit's home, and in that very moment, she cracks the code behind an unnerving secret.
The telescope had a cover with a very strange cutout in it that exactly matches the shape of the cave where Max has been hiding all this time. Holly theorizes that maybe Henry carved the shape in the cover as a way to mark an important spot, so she proceeds to find the place where the two figures perfectly align, and it is there that she finds a secret underground passageway that looks like an old mine shaft.
In the Tunnels, Max and Holly stumble upon one of Henry's memories. They see an injured man carrying a metallic briefcase, barely able to move. Despite that, the man points a gun at a young Henry Creel, who was wearing a scout uniform and was offering to help the man. While Henry clearly means no harm, the man shoots him in the hand without a second thought. At that moment, Henry charges at the man and proceeds to kill him by hitting him multiple times on the head with a rock. Just as Henry reached over to the briefcase and was about to open it, Max and Holly moved on to find an exit.
Holly's theory proved to be true, and Henry's traumatic memory led them to a way out of Camazotz. But while the two had freedom within their grasp, the other members of the Stranger Things group didn't share the same luck.
Vecna launches an attack on the Hawkins hospital
Once Vecna realized that Max and Holly were near to finding a way out of Camazotz, he decided to give Holly a chance: Either go back with him to the house, or he'd get to Max and kill her for real. While the two heroines disregarded the threat, Vecna isn't one to back down from a fight. There's only one little obstacle: Since Max has been in a trance in the real world for quite a while, Vecna could not take a look through her open eyes and determine in which location she was. However, there was another means to obtain this information.
Remember how Will tried to use Vecna's powers against him back in Episode 5, but the villain quickly regained control of the situation? Well, he also kidnapped Will's mind in the process and took it to Camazotz (much like he did with Max and Holly). He then used Will as a spy once more by prying into his memories and discovering Max's location in the real world. From there, Vecna proceeded to send three Demodogs to the hospital to take care of all his problems.
Fortunately, Eleven used a sensory deprivation tank to locate Will's mind in Camazotz and free him from imprisonment. When Will finally woke up in the real world, he proceeded to alert the rest of the gang that Vecna was going to launch an attack on the hospital, so Lucas and Robin instantly rushed there. They weren't alone, however, as some military men arrived at the location looking for Robin, and just when they were escorting her out of the facilities, all hell broke loose.
The Demodogs attacked, and the military couldn't hold their own against them (much to no one's surprise). Lucas ran to Max's room and took her unconscious body out of there with the help of Robin and Vickie, but the four were eventually trapped in a washroom. All hope seemed to be lost, but Karen Wheeler appears once again to save the day by sending an oxygen tank directly to one of the dryers, which proceeded to explode and kill the Demodogs.
Jonathan unproposes to Nancy
Perhaps the most heartbreaking tale of the episode is that of Nancy and Jonathan (unless you want to see Steve and Nancy end up together, that is). After shooting the exotic matter, the two found themselves in a room just underneath the rooftop, where everything was melting, including the walls and floor. After all, the destabilization of the exotic matter had some really wacky effects on everything near it.
The two tried to find a way out of the room for a long time to no avail. Eventually, they accepted their fate, and it was there that they finally opened up to each other. They started listing all the things they didn't like about the other or confessing the lies they've been saying to keep the relationship going. However, there was no hatred in their words, but rather happiness in finally accepting things as they are. Along the way, they realize that they are two very different people who may not have as much in common as they initially thought.
Jonathan eventually reveals that he was going to propose to Nancy, and hands her the engagement ring. He admits that he was convinced that getting married would be the solution to all their problems, but now it's clear that it would simply bring more problems as they are not meant for each other. So instead, Jonathan does something very unique and "unproposes" to Nancy, which she accepts. The ring is later tossed to the ground, only for it not to sink into the melting ground. Instead, matter had solidified once again, and the two weren't at risk of dying anymore. At the very least, we'll get to see more of them in the show... even if it is not as a couple.