An Interpretation (Did You See What I Did?) SPOILERS

First, yes, this entire movie takes place in Hank's head. When they arrive at Sarah's house and we meet other characters, it's a fakeout designed to make it seem like we might be finally seeing something real -- but it soon gets weird and contradictory again. (Note that the coroner is played by the director Shane Carruth, making his feature-film acting debut in a film other than his own. Which were two of the most mind-scrambling and challenging films of all time -- Primer and Upstream Color. Nice in-joke or tip-off.)

Next, how did Hank learn Sarah Johnson's name if he had never approached her? Why would he have her photo as his home screen? That's extreme even for a stalker.

And on that phone, didn't we quickly see shots of them as a couple in various montages?

So, in Hank's reverie (or dream or fantasy) he has never approached Sarah, who therefore doesn't know him at the end. That's a metaphor for his complete lack of emotional availability in their relationship, which presumably led to a breakup which left him suicidal (and stranded on a metaphoric island. Note that when he wakes up on the "mainland," it looks very much if not exactly like the island).

Manny is a device invented by his subconscious to examine a whole host of psychological issues related to his crippled emotional state. Manny can be seen as a part of Hank that should have existed but didn't -- note that he is a corpse who appears at the moment Hank is trying to become one himself. Hank gets to talk to Manny about stuff he never shared with anyone, and explore what he thinks about things by explaining them to Manny. Manny does things he couldn't do, gives him the most basic form of nourishment (water), and it's Manny (or a part of him) who realizes you sometimes want to head off in the direction your libido is pointing you.

Finally, I could have sworn that in one of the final shots, from the beach pointing back towards the cliffs, we see the legs of a dangling hanged man. It's on screen for perhaps a second. Which would make this a take on "An Occurrence at Owl Creek Bridge," with the symbolic reverie of a suicide replacing the fantasy of escape of an executed man.

Either I, like Hank, imagined some stuff, or this movie will greatly reward repeated viewings.

Prepare your minds for a new scale of physical, scientific values, gentlemen.