I have gone to about ten sites concerning explanations for lain, and i think i have finally put it all together. I love this show, and if you dont want to understand it so it can always remain a mystery then dont read this, I kind of wish i hadn't figured this out, but reading on one of the sites it just kind of hit me and i decided to write it down. Anyways, here goes. (copied and pasted the word document, the line spacings represent new facts) just some general ideas.
There is no general order for this.
Eiri and lains father create her with protocol 7
Protocol 7 aligns the human subconscious collective’s frequencies to that of the earth and the wires all around and allows the wired to begin to sync with the real world. This is how the dead’s info, therefore they are remembered on the wired only as being alive still, because there is no way the computers know they are dead. Eventually they fade as they realize that death sucks.
Eiri’s motives go bad and he ends up getting fired, kills himself, because of protocol 7 his info leaks onto the wired.
Eiri forms the knights to try to manipulate lain to serve him. To help him more he has them create the wired lain to force her to come over to stop the suffering.
The knights and Eiri put KIDS back together using the game the teenagers are playing and linking it to the kindergarteners game to it so that they would harvest the phsy.
Lains father is a good man, and loves lain. He does not want lain to find out about all that she is.
When mika dies after being hit by a car she is replaced by the knights so that it wont seem quite as wrong to her family.
The knights screw with lain’s head and all the weird stuff happens.
The guys in black work for tachibana and are helping to take down the knights.
After the knights are gone lain has to overcome eiri who temps her with power.
Alice represents her attachments to the real world. Lain's whole life is in the real world, how would you like to leave everything behind to be almost entirely alone and not rememberd by anyone except for you father, or god? nevertheless, a god of the wired, a true, yet manmade god.
Her father is in the wired and acts as god of the wired after lain overcame eiri, she had the power to overcome him and the knights and anything else all along, she just had to realize it.
Lain exists forever on the wired after the reset, overwriting the other lains that were on the wired.
Her father was helping her and giving her a lot of the power most of the time, but the merging powers were hers.
When she or her father reset the memories of lain, they do not reset them entirely. People still have the faintest memories of her face so that she can visit the real world. (a gift from her loving father)
But in the end, the curiosity and recklessness of humans caused lain to lose it all. The suffering of one(a godlike being) for the salvation and satisfaction of an entire race.
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Serial Experiments: lain *spoilers* and explination
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