WMG / The Sacred Blacksmith

The anime is in an Endless Time Loop

Notice that when Cecily takes Luke's hand in the last episode, the credits roll and it gives you some clips from earlier in the anime. When this happens, the whole thing starts over again. Aaria dies.^note  The clips show the town having battle damage from the recent fight and Aaria planting flowers on Elsa's grave, before she and Cecily visit a more friendlier looking Luke for lunch.