My personal thoughts on the entire matter.
The dream that the player is experiencing is in the quest for the eldritch truth. When Gehrmann gives you a choice, then you (as the player) can choose the end the hunt for the truth there, or continue the nightmare in search of the truth.
Of course there is only one problem: You don't know what the question is, so how will you ever find the truth. The player must suffer and be confused in order to learn the truth, but what truth is it that the player seeks.
This is very apparent in how the game treats the respawning mechanich, where you "Reawaken" into the same nightmare, knowing that it is a nightmare (The Insight serves as a meter for how aware of this, the player character is)
Now if this is the case, then that is an ingenious way of From saying: Are you willing to go deeper into the rabbit hole or do you want a "happy" ending.
This also explains, why the game progressively becomes more and more insane and convoluted as it progresses, it is actively trying to become incomprehensible to make them want to seek the truth even more.
The "right" thing to do would to actually wake up and live life.
Sorry if it makes no sense, but that's what I've been getting from the game this entire time.