The Wikipedia article of the above mentioned movie has a few possible explanations for coherently explaining some of the events happening in the film, but there seems to be no explanation that fits all the events. Is it confirmed if the movie was created with a coherent storyline in the first place, keeping in mind that earlier there were shelved plans for a TV series based on the same?
You might be looking too hard for a reason to have an answer and not even reading from the link you posted. Per your link:
Originally conceived as a television pilot, a large portion of the film was shot in 1999 with Lynch's plan to keep it open-ended for a potential series. After viewing Lynch's version, however, television executives rejected it. Lynch then provided an ending to the project, making it a feature film. The half-pilot, half-feature result, along with Lynch's characteristic style, has left the general meaning of the film's events open to interpretation. Lynch has declined to offer an explanation of his intentions for the narrative, leaving audiences, critics, and cast members to speculate on what transpires.
Emphasis is mine.
Lynch didn't give a reason for the film being the way it is.