I watched this for the first time yesterday and didn't really understand it. Is this gonna be one of those movies I have to watch 5 or 6 times to understand? I loved it, I just don't get it!
Everyone needs love fool
"The Dust Factory" is an allegory about the process of living; much like "Groundhog Day", the idea is that most of us just go through the motions of living (each day is just a repeat of the day before). The theme is the importance of having the courage to live life to the fullest and to get the most out of each day.
"Groundhog Day" illustrated this by having one day keep repeating itself for the main character. "The Dust Factory" does it by creating a symbolic place between life and death. This place is populated by those who are in a coma state, their body is alive but their conscious mind is no longer functioning. These people are allegorical (meant to symbolize those who are not living a full life). The circus ring is the point where people finally decide whether to get on with living or to get on with dying (a line borrowed from "Shawshank Redemption").
Either choice is a valid alternative depending mostly on what stage you are at in your life (the grandfather chooses death-the teenagers choose to live for a while longer), the wrong thing is being stuck there in limbo which symbolizes the day-to-day existance of many people.