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In the 2001 film 'The Others,' Anne keeps referring to "that day her mother went mad" which sort of tells the audience that she knows that they're all dead... but, she's just as shocked as Nicholas and her mother at the end of the film when the Old Lady asks them about Grace murdering them.

She even insists "we're not dead" with her mother and brother. But, she obviously remembers something happening to them, as she told her father "everything," as Charles says to Grace.

Grace discusses the situation with Charles as if she also knows something happened, but they don't disclose what. What is it that they think happened, since they don't seem to realize that they're dead?

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I don't think they actually think about what happened after "mother went mad". Grace explains her experience of their death like this

Grace: I tried to wake you up... But you didn't move. I said to myself: "It's happened... I've killed my own children". I put the rifle to my forehead and pressed the trigger... But nothing happened, and instead of the shot, I heard your laughter in the bedroom. (With a bitter smile:) You were playing with the pillows as if nothing had happened. And I thanked the Lord over and over again for being so merciful with our lives, for giving us... another chance... But now, now I don' know what to think... (sobs) Now I don't know what to think!

Source: Screenplay Explorer

This implies that the person is not aware of their death. So, for children, their mother went mad, and then all was suddenly as it was before.

Grace, on the other hand, did remember their deaths (as they happened a short time before her own), but she attributed them being alive to the grace of God.

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