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Lynks Causes Superpowers
A really weird theory, but it could be a contagious superpower of sorts. The following are the powers I can discern:

Madison - Phasing through objects, ala Kitty Pryde. She can't control it and that's why she's stuck phasing through the floor. However, this may be Pink Guy affecting her and she manages to 'escape' his power by phasing through.

Jackson - Fairly obvious, the whole attempt to crack into government websites.

Pink Guy - Again fairly obvious, he can make things cling to the ground. His physical condition is probably a side effect of this.

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Tom, Anne, the grandmother, Dennis, and the baby don't have any apparent changes. Tom and the grandmother both attempted to use clay and perhaps it did actually work in preventing Lynks (with the side effect of not making them entirely mentally stable themselves), and for the baby it might not have just kicked in. As for Dennis perhaps we just don't know it or perhaps he isn't actually infected either.

Additionally, the two men behind the tree and who beat up Dennis are Men In Black. They were most likely alerted by Jackson's tampering with government websites and they attempt to remove anyone who might interfere - aka Dennis. What their true goal is I don't know.

I do have one alternative theory as well that is in the same vein of this - Tom was the only one who developed 'powers', and he created the 'reality distortion'. If it were only a delusional disease, unless we subscribe to Sheldrake's idea of morphogenetic fields, it wouldn't make sense that they all have the same images. However, if Tom could manipulate how people perceive things, it would begin to make sense. This also ties in with the idea that the pink guy is a personification of the fear of the disease, Tom might not be able to control his powers and creates this personification that other people can see subconsciously.

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One Big Family
Why else would both households from Unedited Footage of a Bear and This House Has People in It have a photo of Jackson in them? An interview already hinted that both shorts most likely occur in the same universe meaning that both families may have been or are related to each other. The reason they have the meds from Unedited Footage of a Bear is that the side effects of it are still unknown and the events of Unedited Footage of a Bear may not have occurred yet. The meds could also explain why everyone in the house is crazy sans for Jackson who seems immune to whatever is going on.

The "Pink Person" is alantutorial.
Dressed only in sheets, both seem to enjoy hiding from other people and doing random tasks.

The "Pink Guy" is Pink Guy.
In this universe, Real Frank never returned and Chin-Chin's curse ran its course on Pink Guy, turning him into the creature seen in THHPII. The third screamer in the calls between Tom and Ann is Pink Guy trying to scare the two into cooking enough ramen to summon Real Frank, which would help him get back to his natural state, but they can't because Fake Frank, with the help of Chin-Chin, keeps sending pizza to their house as a diversion.

The story is set in the same universe as The Sims
A lot about the original short seems rather Sims-like, with the grandmother seated in the chair continuously, the seemingly repetitive nature of ‘’Sculptor’s Clayground’’ and the way baby Amber is able to just waddle out into the backyard. Boomy the Cat resembles characters such as the Social Bunny and Marky Sharky, who share their dimensions with adults in goofy costumes. And as things go south for Madison, most of the father’s actions are reduced to shouting and flailing his arms about like a Sim during a fire.
  • I was about to come here and comment this. Another observation I had when I first saw the video was that Madison's phasing through the kitchen floor seemed reminiscent of a video game glitch, and the general oddness of the whole thing made me instantly think of sims.
  • Also, they don't notice that the repairman being beaten up despite the fact that they should be able to see them through the window. In the game, your Sims often can't see things happening because theres a window "blocking" the way.

the story is symbolic of an abusive and toxic family.
Perhaps THHPII is meant to capture the confusing, painful and contradictory lifestyle of a toxic family. There are no actual cameras; they are symbolic of the constant stress of being in a house where your every movement and mistake is microanalyzer and mocked.

  • The original short: Tom and Anne definitely show signs of being Abusive Parents, or at the very least, neglectful. The biggest example of this is how when the two of them see Madison lying down on the floor completely unresponsive, and their first responses are entirely ridiculous. Anne is angry and petulant, assuming that Madison is doing it for attention (and even if that was Madison's intention, wouldn't that indicate that there is still an issue?), and while Tom is a bit better and points out that something is wrong, he certainly doesn't care enough to actually help, and outright says he's on "nobody's side" (It's not uncommon for one parent to enable the unfairness of a household by being more hands off.) This goes so far that Anne is taking pictures of Madison on the floor to embarrass her, which Tom does nothing to stop. Once Madison starts sinking, the two realize their error too late.
    • They don't really do much to actually solve the problem; they could call the authorities and ask for help to dig her out of the floor (It might have failed, but it's certainly worth a try), but instead, they simply try to yank her out of the floor, push her through with a stick, and, in Tom's case, go on a deluded tirade directed at Madison [1] about how as a family they must love each other and help each other, indirectly blaming her for the situation. Basically, it comes across as parents neglecting and bullying their own kid while they are in a dangerous situation and then, when things turn for the worse, place the blame on the distressed child instead of actually fixing it. It also may reflect that abusive families avoid calling the authorities because they think asking for help is below them, or they don't want their victims to snitch.
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    • Jackson and the baby are neglected in the parents' attempts to "help" Madison, with the baby roaming freely and Jackson's birthday party cancelled because of the distress of Madison's situation. Jackson's reaction is noticeably solemn and understanding for a child, as he simply cleans up the cups and decorations in the living room. It's like occurrences similar to this happen a lot, where the adults in the house get into very loud altercations involving his step-sister. The grandmother doesn't make too much fuss either.
    • There is also a moment where Tom and Anne are alone where Tom grabs Anne's face and uncomfortably starts complimenting her, even when she screams at him to stop. Keep in mind that their daughter is sinking through the floor above them while this is happening. This family sure as hell can't deal with bad situations properly. One Big, Screwed-Up Family, indeed.
  • Aside from that, the other clips demonstrate how high-strung a life with an emotionally-abusive family can get; not literally, but symbolically: There are plenty of clips in which characters are doing odd things in a rushed or paranoid way (like one clip that had Anne destroying pizza and placing it onto of a high cabinet). This could reflect two different things; the affects of mental abuse, and how, after a while, you do strange things to skirt around those that hurt you, OR to represents the weird lengths an abusive person will do just to inconvenience their family (There are many stories of abusers destroying their victims stuff). Of special note, there is a clip where everyone is in the living room, and Tom begins singing loudly, to the point of screaming, while everyone sits and stares quietly, almost like this isn't rare. Much of the family's interactions are tense and uncomfortable, almost like they're stepping on eggshells around each other.
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