"The Turning" offers two endings: either Fairchild Manor (Bly in the original novella and other adaptations) is haunted by the ghosts of its late stablemaster, Quint, and Flora's former governess, Miss Jessel, or Kate has gone completely crazy. How the film is structured implies that the second ending is the "real" one.
"The Turning" is an adaptation of Henry James' novella "The Turn of the Screw." In the book, the ending is very different, and if you take the text at face value, then the ghosts are very real — but, according to a lot of the book’s fans, that's a big "if."
In the film, it's tough to rule out the ghosts entirely; Kate starts hearing voices almost as soon as she moves into the manor. We're not seeing the supernatural through Kate's eyes, so it seems real.
The false climax implies that Miles is possessed, or could it be that Miles torments Kate simply because he doesn't like her? Literally or figuratively, Quint's evil spirit lives on through the boy.
Director Floria Sigismondi confirmed that the ending was intentionally designed to spark conversation among people. She said, “I wanted [the movie] to be different and surprising. I wanted to redeem Kate and tell a more emotional story."