My explanation (spoilers, obviously)
I originally found this movie mystifying, but eventually realized what was going on. Things become much clearer if you realize that it's the dramatization of a dream. See the reference in the very first post on this movie here (the one that is titled "Matt Sobel on film's inspiration...".)
This explains why the characters act and speak so strangely, especially in the last half. They are part of a dream. This is one of the creepiest movies I've ever seen, and I couldn't quite put my finger on why it was so creepy, but it's because it's a dream. It's creepy in the same way as Eraserhead.
At the end, the father says "Am I missing something here?" And I sort of felt the same way. But the point is that the father is the normal, waking persona who doesn't understand what the dream is about. We're led to expect that there's going to be a big payoff at the end where all is revealed (and the gun will probably be involved!). But this doesn't happen. It deliberately leaves up in the air exactly what happened in the past and what's happening in the present (as the posts on the board here show: everybody has their theory).
The action in the movie happens in "dream logic". It continually violates "Chekhov's gun" (see wikipedia: if a gun appears in act 1 or 2, it's supposed to go off in act 3. And it's not necessarily a literal gun: every memorable element in a story is supposed to be necessary to the eventual denousment.) But the action in this movie repeatedly violates this:
1. Ryder is gay. Obiously important (and the reason we rented this, thinking it was an LGBT movie). But nothing at all comes of it. Chekhov's gun.
2. The paint on the car looks like an important plot element. But it's just forgotten.
3. The bullies in the red pickup look like they're going to be important to the plot. But they aren't.
4. There's a literal "Chekhov's gun" in the scene with the gun. I'm guessing that the director intended this as a deliberate homage to Chekhov.
5. We see a blind woman. You have to assume that a blind woman is going to be critical to the plot (the last movie I remember with a blind woman was The Miracle Worker!) But she never turns up again.
Finally... the movie is full of Freudian "dream-punning." The protagonist's name is Ryder. Hmm... Riding is an important part of the movie (not just the horses, but the "chicken-fighting" stuff). Can Ryder ride a horse? He says he can, and he easily gets on (not easy if you haven't done it before, I suspect a stuntman was used here). But he doesn't know how to handle reins. Odd... But in a dream, things don't have to be consistent.