The period on which this film is based must be between about 1935 to 1945. We can obviously infer that Chiyo's father was conscripted by the Japanese government. And, it was Obon. By the way, in my hometown in Fukushima Prefecture, Obon has never failed to be practised. During that period, we are told never to go out to such places as the sea, the mountain and the river. And, as was referred to in the film, it is believed that the dead come back to our world from the world of the dead. On the last day of Obon, we visit the graves to see off the dead.
Anyway, Chiyo was taken to another world by her father, which means that she is dead.