Characters
A dreaming boy, a mermaid and the police
Settings
It is a community or a country which is controlled by the police. Therefore, there is no freedom.
What they want
The boy wants to imagine. But the police forbids him from dreaming.
The fantasy and the reality
I think the boy is in the world of fantasy. But he thinks it is real.
The end
As the boy was tortured and brainwashed, he forgets about the mermaid. However, when he went to the sea, he remembers about the mermaid. So, he was able to see the mermaid again.
What happens next?
I think the boy and the mermaid will live happily in the boy's imagination. However, the day will come when the boy would need to understand the boundary between the fantasy and the reality.
Theme
I think what Tezuka wanted to appeal in this film was that every person has a freedom to do or imagine.