The clue at the beginning is the dancers.

Many people occupying the same space oblivious to everyone else - for want of a better phrase, parrallel dimensions.

Within these dimensions are a set number of people, in each layer they represent other people, this is why names change and so do relationships.

There is some problem with the organisation of these co-existing realities and some cross contamination occurs.

The overall result is a conspiracy to stop the Naomi Watts character from achieving her potential, through inexplicable changes within her reality.

Two realities are evidenced near the beginning - all smiles happy folks and disheartened isolated folks. Heaven and hell if you like.

Ultimately, these observations are solely subjective, however, one observation I have made can be declared universal:

All David Lunch has done with this movie is strip a classic narrative of all it's dressings and put odds and ends on it.

If you remove the scenarios and view the narrative, it makes perfect sense in an A to C via B formula.

I watched it again and decided it is simply a joke by David Lynch, designed to get people discussing it.

The first half follows directly from the second.

He has caused confusion by adding several red herrings and breaking many rules of film making, not least changing which characters are played by which actors.

Diane is already dead when Camilla (Rita) meets Betty (not Diane).

There is no dream, it is simply a different character played by the same girl.

This may or may not be symbolic of characters with dark motives conspiring to prevent Diane from achieving her ambition (Camillas plight prevents Betty auditioning and potentially causing more trouble between the director and the gangsters), perhaps even placing her internal soul into another external body - this would explain everyone laughing at her at the party when she says Camilla got her movie roles (Diane is not an actress, she is a lesbian waitress, she still thinks she is Betty).

It's deliberately vague in many areas so that many different theories can be applied, yet no theory can be supported by all the evidence.

In short, a standard hollywood narrative with the dressings removed, at least three potential explainations, each of which is ultimately incorrect.

I feel confident enough to say there is no explaination, only the source material for infinite speculation, and everyone is right but wrong.

Thinking about this movie is like playing chess 15 moves ahead, you follow a train of though and find yourself blank when you reach a certain point. Regardless of which theory you choose to pontificate there are always loose ends.

No i really think theres is an explication , but theres only one , and probably only one person can tell us , but those things you said about name changes are not true , since if your in a dream theres is no rule , and like betty/diane are the same person , lol i wanted to answer you but ive think about something ,
actually in the movie we see that betty is a waitress , and that diane is a girl trying to get into movies as an actress , but one of those personality must be true , and if i had to choose one , i would choose betty , since its betty who called the hit man and after diane opens the blue box , right after the moment where they come back from the silencio club ,

So what i dont understand is , how did betty met Camelia/rita ?
We know that diane was trying to get into movies , then they said the met on a set for a movies
but how can 2 people actually met on the set if diane personality was just a dream , ok now im getting lost here , i dont know what im writting anymore , anyway if someone can understand where i want to get to , please let me know cause im not here anymore

you really made a mess of that!
try reading the explanation on this site

I just have to say that I don't agree with you when you say that there is only one explination. This is the kind of movie you interpret yourself, and it's impossible to get two versions of that that are exactly the same. I think that that is the main purpose with this movie.

Y0u obviously have no idea what you are talking baout because you said David Lunch instead of Lynch and last time i checked David Lynch wasn't edible

Oh please. Like a letter is the important thing in this. Grow up, will you?