I'll start with the positives: To me it's very clear this is an allegory in that it's not supposed to take place in the real world, but in an allegorical world, and that the school is an allegory of girlhood. In as much as we see it this way, it's refreshingly original in not presenting an idealized, unicorns-and-rainbows view of childhood. We see severe bullying (Iris being whipped until her legs bleed), and above all, the place is clearly a prison (I found Alice very sympathetic in this regard) - nobody allowed in or out save in very particular circumstances, the lack of even doors in the wall, the constant talk of punishment and things that are forbidden, lots of seemingly arbitrary rules, etc. For example, the teacher telling Iris that the only way to happiness is through obedience is not actually very different in content, though it is different in form, to things adults say to young children all the time. Even from the very start, with Iris appearing in the coffin - others have seen this as a cocoon but, to state the obvious, a cocoon and a coffin are not the same thing. The implication is that the place is like a tomb (where coffins are placed) and therefore living there is being compared to live burial, or being dead. Even the white clothes fit into this - while in the West white is associated with purity it is also associated with dead children (the tradition of burying them in white) and with hospitals. Also (and bear in mind Iris's appearance is Southeast Asian) in some Asian cultures white is associated with death and is the colour of mourning.
There is also the objectification of children - when the headmistress inspects the girls, the teacher and her seem more interested in discussing what their necks are like than what the girls can do. Now, think about a time when something bad has happened to a girl - if she's at all pretty, many adults will lament that such a thing could have happened to such a pretty girl, and this is far more common than lamenting it happened to such a clever or nice or hard-working girl. Also, photogenic girls that get hurt or go missing get far more press attention than ugly girls or boys. Think too of "tiger parents" that seem to value their offspring winning specific material prizes (certain grades, a certain prize, medal or badge in a competition, or being able to perform a task to some specific standard) than their well-being. Finally, in many parts of the world, for many children childhood is basically a period of slave labour in the service of adults. Thus an authority figure inspecting their teeth as if they were horses isn't far off in essence from things adults do all the time.
The ending is therefore clearly an allegory of entering adolescence - the significance of Bianca meeting the boy, and of the earlier references to butterflies, are obvious. As for the fountain, and the underwater shots, water is sometimes a symbol of re-birth (because of its association with baptism and childbirth), or it may be a reference to sexual fluids. Thus the early underwater shots may refer to passing from toddlers to children, and the ones at the end may refer to going from childhood to adolescence.
As for the negatives, I'll start with the less important objections. There are lots of specific scenes that seem pointless and meaningless even as allegories, and that don't really add to character development or move the plot forward, and thus only slow down the film.
Now, by far the biggest objection is related to the matter of child nudity. Actual or ostensible, partial or total child nudity can be completely justified in some films (a scantily-clad young Jodie Foster in Taxi Driver, a brief simulated shot of a child's nether regions in Let the Right One In, partial nudity in Lawn Dogs or in My Life as a Dog) due to what it contributes to the story (character development, context, creating visible vulnerability, etc) or even to realism, such as having kids in a pool or a beach in swimsuits. Such scenes may be uncomfortable to watch (particularly if there are overtones or implications of sexual themes), but they are not gratuitous and their inclusion can be justified on artistic grounds. For example, in Innocence in itself I see nothing wrong with the girls being shown swimming. However, I do think the film is very insistent in showing us bare skin, even in instances in which there is no reason to do so, and not just a few times, which one might put down to realism or simply no aversion to nudity, but very persistently (think along the lines of "once is happenstance, twice is suspicious and three times is enemy action"). From the very beginning, the first thing we're shown, for no particular reason, is the girls' bare legs - well before we see their faces. Or even when Alice is going to run away, although the temperature is below freezing and she's wearing a scarf, we're still shown her bare legs as she's still wearing a short skirt and regular socks. No particular scene, including these scenes, is on its own out of line, but when the film is so persistent in taking shots like these (and any number of these scenes could've easily been shot another way or from another angle, somewhat longer skirts could've been used, at least in the winter scenes, etc), so that the sum total is gratuitous. I could not, in good conscience, recommend this film.