1. Main idea of the anime
I think the main idea of the anime is imagination and fantasy. It’s trying to tell us how wonderful our power of imagination is.
2. What’s going on in the anime?
It denounces the tragedy how the imagination that is inherent in human nature is stolen from us by management education. We can see this from the anime, where the boy gets arrested and his ability to fantasize is forcibly taken away by the government. Around the time this work was produced, "examination wars" became an issue in Japan. At this time, the education scraped away children's individuality and averaging them out was becoming prevalent.
3. What do you think happened in the end?
When he finally got released, the boy no longer remembered the mermaid. Grieving, the boy went into the sea. Though, surprisingly, he reunites with the mermaid. In the end, the boy and the mermaid disappear into the sea.
When we grow up, we all forget what happened to us as children and think that it was a dream. But I believe the boy refused to forget his childhood fantasies and disappeared into the horizon where no one could reach him.