1)The reason for the expulsion in the movie was not really explained but in the book the reason for the expulsion was Miles was being a bad influence on the other children. It is up to the reader to decide whether Miles was being bad because he was possessed or influenced by the caretaker, dealing with the trauma of losing his parents or just not wanting to be away from his sister. In the book they were much younger than in the movie with Flora not being old enough to have started school. I think she was about 4 and Miles was 6 or 7.
2)I took Miles peeping into the nanny's shirt something that a boy about his age would do.
3)It could also have been just a boy playing a trick on his sister. It was not an axe that he had but a scythe.
4)In this scene they could have been playing a trick on the nanny or Miles could have been possessed by the caretaker. The story about playing a trick on her might have been a cover up for what was really going on - the possession.
5)Showing the scenes of the nanny and showing Flora giving her doll a bath together make the scene look menacing but if they were not edited that way, the scene would have just been flora playing with one of her dolls.
I personally don't think that the children killed anyone. The way they acted was understandable as they were traumatised first by the deaths of their parents, then their first nanny, the suicide of the caretaker and then they got a person with demons of her own to watch over them who projected her own trauma onto them.
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