Why are Silent Hill's monsters more humanoid this time around, with few exceptions? Because for Murphy, his most important personal issues are with specific people and/or locations (ie the prison itself), instead of purely internal. In addition, there are hints that the symbolism isn't exclusive to Murphy, relating to characters like Anne, or even lesser characters who are also in Silent Hill.
Bogeyman = Murphy's hatred of Napier, as well as his seeing him only as a monster. Conversely, Anne seeing Murphy as a monster for supposedly murdering her father.
Doll = Murphy's grief over losing Charlie, ie the real self turning into a shadow, out of his grip. The Doll's shadows can also be seen as his desire for revenge, or his wife turning against him, especially after he got in prison. At the same time, the Anne's Story comic shows them accusing Anne of cheating, as befitting their 'sex doll' nature.
Wheelman = Murphy's feelings over Frank Coleridge, who he murdered/attacked him until he became a vegatable or was framed for doing so. At the same time, Anne physically saw Frank became what he did, so the degeneration twistedly fits how she saw him before death.
The Wheelman Boss/Wheelchair Boss = Murphy seeing Frank as a vengeful spirit who wanted to get revenge for his current state.
Screamer = Murphy's grief over his wife turning against him, and perhaps indirectly, Murphy's reaction to prison alarms/police sirens (given their screeching attack).
Monocle Man = A representation of J.P. Sater, his appearance representing the accident that the man got into trouble for, and that Murphy read about shortly before their meeting.
Other possible symbolism for the other monsters: Weeping Bats may be Murphy's need to hide, or that of solitary confinement; Prison Minions + Juggernauts represent his other inmates, their dark desires, and Murphy's time in prison under the control of Sewell; The Void is that of Murphy running from what he's done, from the guilt of losing Charlie, and how close he is to giving into darkness; the Wall Corpse's + Tormented Souls during Otherworld runs may represent Murphy being trapped in his own cycle of revenge + pain.
While attempting the trophy for completing the game without killing any non-boss monster, the player is not penalized for killing an enemy mid-combat (meaning they fall over and immediately dissolve rather than writhing on the ground). Anti-Frustration Feature? Probably, but it also fits the legal themes of the story. Killing someone while they're helpless on the ground is murder; killing someone who is actively trying to kill you is self-defense. Generally, judicial systems are much more lenient towards the latter, so the game is as well.
Of all the game's manifestations, Homer (the homeless guy) seems the most out-of-place. However, if you look really closely, you'll see prisoner shackle rings attached to his clothes, much like those you'd find on Murphy's prisoner jumpsuit. This, combined with his lines about being vermin to survive, heavily implies 'from one prisoner to another' in his interactions. This homeless guy is showing a possible glimpse at what Murphy could ultimately end up as, from being constantly on the run for the rest of his life.
During the Otherworld chase sequences, you can knock over cages to slow down The Void. But if you take a good look at the cages, you can see tortured creatures inside of them. And if you look back after knocking them over, you can see The Void sucking up these tormented souls, cage and all. In other words, a snack before the main course.
The 'Truth and Justice' ending has Anne confronting Sewell with a gun behind her back, the implication that some revenge is about to be exacted. That being said... what's the plan from there?
Remember what the nun said? "Revenge is a long and treacherous path, Mr Pendleton. Where do you think it leads?" To more killing, of course. Murphy got locked up to kill Napier for killing his son, but then he was ordered to kill Frank, which led Anne to want to kill him, but then it turns out it wasn't fully his fault, so she goes to kill Sewell, but... oh dear oh dearů
This is assuming Anne hasn't already considered the consequences of her revenge, which seems unlikely given her characterization as an experienced cop. She might deem her career, or even her freedom, a worthy sacrifice if it means killing Sewell. Which may or may not prove the nun's point.
She already planned to lynch Murphy after the crash. Just chalk up Sewell's killing as done by an inmate that died in Silent Hill.
The monsters get a fair bit of Fridge Logic, too. In no particular order...
The Weeping Bat has no significance to Murphy at all. It's based off a Silent Hill legend that he couldn't reasonably have known about, and even then lacks any sort of psychological significance.
The Weeping Bats are strongly connected to a place with a dark history of child-related death which Murphy is aware of, which is very relevant to Murphy's journey.
In addition, as most of the monsters in Murphy's personal trip relate in some way to imprisonment, the Weeping Bats serve double-duty; not only do they exist only in the dark and in hidden places (Solitary Confinement), they also attack primarily by ambush, and when confronted directly, puff themselves up as big as they can, to cut a more intimidating figure. In prison, violence is sudden and unexpected, and appearing weak is a sure ticket to ending up in a real bad way. Considering how unpleasant Murphy's stay in Ryell was, it would make sense that both of these features would be reflected. Keep an eye on a Weeping Bat that hasn't engaged you yet (under the bridge, for instance); they hunch up, creep around. It's not until they feel threatened that they stand up to their full height and try to scare you off.
The Wheelman represents Coleridge in his vegetative state. Murphy didn't even know that Coleridge survived the shower-stabbing until the last several minutes of the game. Cunningham deliberately left him out of the loop.
There's no reason Murphy wouldn't know. He was being convicted for it; the details are legally required to be made clear to him, and it's unlikely Anne would be able to get around the legal system to that extent, or otherwise hide Coleridge.
The Dolls only appear once Murphy starts seeing abandoned store mannequins, which makes no sense if the monsters of Silent Hill are supposed to be made from flaws and insecurities of individual people, not random things that are lying around.
As per Anne's Story - originally designed to be canon DLC - the Dolls are more reflective of Anne and her self-image after she performed sexual favours in order to get Murphy transferred to where she wanted him.
The normal convict enemy is just a guy with a metal device on his head. If Silent Hill was trying to make him symbolic of prison violence, it wasn't trying very hard. Murphy almost never talks about the supposedly-infamous prison riot that took place the night he either stabbed or was set up to stab Coleridge, nor does he reflect on any sort of violence in his prison save for the aforementioned encounter and that which he had with Napier at the start of the game.
The juggernauts aren't necessarily indicative of prison violence, just the terrible nature of prisons in general, and the corruption that came with Murphy's stint in prison specifically.
See Fridge Brilliance above, for possible answers. Silent Hill's monsters are always symbolic of something, that much is guarenteed. No one said it had to be about the main character's internal issues though; issues with specific people that are ongoing can be done as well. Or possibly a combination.
When Murphy kills Napier, Sewell specifically mentions turning on the shower faucets to fog up the cameras. But when Sewell/Murphy stabs Coleridge, he does no such thing.
Perhaps this is why Anne approached Sewell with a gun behind her back. Because she already had the evidence she needed to condemn him.
Perhaps due to the riot the cameras had been disabled (either by the inmates or Sewell in the confusion).
They were; the power was cut during the riot (note the Jump Scare in the Overlook of prisoners attacking the control panel with weapons). This is why it's dark and Coleridge and Sewell are walking around with flashlights.
Moreso for people who've played the other games. In every other Silent Hill game, the Otherworld is - with the exception of "Nowhere" sections - the same layout as the Fog World, just with more monsters, more obstacles, and a different, more overtly scary aesthetic. In this game, the Fog World completely burns away and the Otherworld is a nonsensical mass of distorted or impossible geometry, messed-up physics and such. Somewhat like "Nowhere" on steroids. There's no attempted explanation for why this is the case for this game only.
Design decision implmented for this game only. If we're gonna go for symbolism here, it might represent how Murphy's life turned upside down, from Charlie being killed, to Coleridge becoming a vegetable, all because of his desire for revenge.
Overlook Penitentiary is a level in this game and in Silent Hill: Homecoming, but the layout is completely different between them and, more strikingly, Homecoming has it in the town itself on the north side of the lake in Central Silent Hill, but in Downpour it's on an island in the middle of the lake like Alcatraz. The games are only set about five years apart, and all the memos and such in Downpour make it sound like it's been on the island since it opened.
Word of God says that the location and layout in Downpour are the prison's real appearance, whereas the prison in Homecoming was a sort of manifestation from the powers of the town placed in Central Silent Hill for... no apparent reason.
Disregarding Word of God for now, it's is possible that the Penitentiary in Homecoming was the more "recently" put together building, while the Penitentiary in Downpour was the original prison that was eventually abandoned.