What I think
I think it's obvious that in the final scene, Iggle Piggle isn't just asleep; he's dead. He died from either starvation, dehydration or pneumonia, which would be plausible considering only having a blanket. The Narrator tries to convince us that he's "safe" now. Iggle Piggle is dying from (more than likely) dehydration and the episodes take place in his mind. As he sails, the stars start turning into the white flowers, and he imagines himself in a happy garden with friends. When the Narrator tells him "It's time to go," he doesn't want to, because he knows that he isn't going to wake up, even if he leaves his dreams. My favourite part of this is that Iggle Piggle is blue from the cold. As for the other characters, it seems as though they are friends who he has been forced to leave behind. Makka Pakka is Iggle Piggle's best friend. Upsy Daisy is probably his ex-girlfriend or wife, and it makes sense to assume she died. He's overp...