My explanation (SPOILER)

The film leaves the viewer somewhat scratching his/her head with its ambiguity. What conjured up the Wendigo? What's its purpose? How exactly does it "devour" people with its unquenchable hunger? Why are certain people singled out? What role does Miles (the kid) have in the Wendigo's manifestation and subsequent reign of terror? Etc. I love films like this because -- beyond having an artful style and an air of professionalism -- it doesn't spell everthing out for the viewer. It leaves you banging your head to figure it out.

Here's my explanation:

Children are more sensitive to the spiritual realm because they haven't yet built up years of intellectual blockades along with social conditioning. It's clear that Miles senses malevolent creatures or spirits around him, which is why he and his mother check the closet and underneath the bed before he goes to sleep.

The Wendigo is a spirit and can only manifest in the physical realm through an agent who releases the spirit through BELIEF. The Wendigo souvenir plays a role in the Wendigo's manifestation because it was created by someone who BELIEVED in the Wendigo; it's in essence an article of worship and, in a sense, an idol. Hence, the Wendigo is attracted to the figure, which can inspire BELIEF in certain individuals, like Miles.

The ghostly Native American in the souvenir shop is obviously the Wendigo in human form. He's attracted to Miles because he senses belief and therefore guides the boy to the Wendigo figure and explains the "legend." He says, "No one believes in spirits anymore," but after sharing the story of the Wendigo he asks the boy if he believes, to which Miles responds, "I guess so." This wasn't much, but it was all the Wendigo needed. The boy gets his mother to purchase the statue and thus the Wendigo is released into the physical realm to devour human prey.

The Wendigo is an evil spirit and therefore a liar. In Indian form he claims that such spirits are not "bad" just "angry." In other words, he makes excuses for his malevolent actions. Our prisons are full of people who do the same thing.

Once released, the Wendigo immediately inspires Otis to shoot the husband and, later, kill the cop. The Wendigo then goes after the very person he used, Otis, which shows that evil spirits will readily use you if you're willing and then lose you. Why didn't the Wendigo provoke someone else? Because evil spirits can only utilize those who are ALREADY given over to the dark side of their natures. The film shows that Otis was already an arrogant SOB and potential psycho. He doesn't go "over the edge" until AFTER the Wendigo is released.

If you're wondering why the Wendigo required belief to manifest in the physical realm, just think about it: It's the same way with God. The bible says that "without faith it is impossible to please God." Faith is the key that activates God on our behalf, answers prayer, heals and moves mountains. Why would we think it's any different with spirit beings who aren't benign? The difference is that when they are released through belief they cause havoc and destruction, not blessing.