Holy crap! Holy crap! Holy crap! Everybody get on your computers and scream! It's THEORY TIME!!!! Please watch the video and, if you are not familiar with the DHMIS series, please check it out! A TON of effort was put into it!

Basic summary of the plot:
Don't Hug Me I'm Scared centers around three puppets. A child puppet, a bird puppet, and a hairy puppet. These three puppets meet one or more other puppets in each episode who attempt to teach them about topics such as time and creativity.

We are now going to enter spoiler territory! You have been warned!

The antagonists of the series, in order are a notepad, a clock, a butterfly, a computer, a spinach can and piece of meat, and finally Roy, the father of the child puppet. Each antagonist gets their own episode with the exception of Roy who shows up in the background or, in the second episode, directly onscreen periodically throughout the series. There are many theories out there for this web show but, I will attempt to not use any in order to create my personal theories. Here we go!

THEORY ONE: The puppets are stuck in a time loop.
This theory is very simply explained as, in this episode, which I am assuming will be the last in the series, the hairy puppet unplugs a cord connecting to a control panel which ultimately leads to the series starting over from the very beginning once more. This was probably done to let the puppets have another chance at fixing their past but, as the child puppet and the bird have shown, it is very unlikely that this will be done as the puppets aren't exactly smart enough to put things like that together. It could be another loop however, as it seems that, after the plug is pulled, the hairy puppet seems to revert back to the mindset he was in during the first episode.

THEORY TWO: It is all a dream.
This theory would also explain the time loop as well as the fact that all of the characters change color when at the beginning of the series once more. Not only does the color change prove this, but also the way that the episode starts. This episode is all about dreams and the different things that you can dream, based on what the bedside lamp says. As the episode goes on, it shows the hairy puppet in an office with identical versions of himself, a very odd occurrence, unless you are in a dream. Hairy guy has a thought, "What if a file could talk?", a sentiment later shown in the control board scene. I believe that this is not just a random person's dream, but the hairy guy's dream. This would explain why in earlier episodes, he gets off scott-free while the others do not and how he seems to be able to stop the show if things get too insane. Unplugging the electronics shown in the episodes and shutting down his dream, taking control. This theory, I feel is the most accurate as it does seem possible.

THEORY THREE: The main characters are stuck in an alternate dimension.
This theory of mine is that the puppets are stuck in an alternate dimension where everything is against them and reality seems to warp around them. This would explain the reason why, in the computer's episode, they suddenly appear within the digital universe and it starts to become corrupt. Each puppet also seems to be being hunted or harassed, whether it's by a harmless-looking butterfly or clones of yourself. This one is shorter because most points that go along with this theory have been talked about before.

So, what are your theories? Tell me in the comments and I'll SEE YA, PEEPS!!