I heard a theory that Klonoa 2 in its entirety is just Klonoa coping with his painful experiences in Phantomile. He travels to five different kingdoms in the game, each one represents one of the stages of grief. I'm going to borrow this from TVtropes.
"Each of the kingdoms represents a part of Klonoa's psyche, and the fact that people from the kingdoms don't mingle are symbolic of Klonoa blocking out certain emotions. Lolo is possibly symbolic of his hope or desire to do his best. But most of all, the King Of Sorrow looks remarkably like Huepow (note the ring of rope around his neck and the teal colours); this could represent the lost friendship that he and Huepow had, and how he saw himself in Huepow as one would with a close friend. The icing on the cake is that The Fifth Kingdom is called Hyuponia and throughout the second to penultimate level, hints of the Windmill Song play amongst the twisted music.
There are five kingdoms based on emotions: Tranquility, Joy, Discord, Indecision, and Sorrow. There also happens to be five stages of grief: Denial, Bargaining, Anger, Depression, and Acceptance. Because of imbalance, the kingdoms are displaying their respective stage of grief, and are traveled to in the same order as the stages of grief: La-Lakoosha priestesses in denial that the world has gone into chaos and just waiting for the Dream Traveler, Joliant trying to distract itself with endless entertainment in hopes to stay happy for a little while longer, Volk City devolving into senseless war and Leorina making a ring copy out of anger, Mira-Mira citizens getting depressed and asking "why bother with anything anymore?", and lastly The King of Sorrow accepting that he needs Klonoa's help to end his life. And as each bell is rung, that stage of grief is passed. So during the course of one dream, which in gameplay time is little over 4 hours, Klonoa has coped with grief that would take a normal person many years to resolve. That's pretty badass.
Also note the symbol of the priestesses of La-Lakoosha, and the statues of the Mother Goddess Claire. The green triangle represents Klonoa's Dream Ring - a fabled artifact spoken highly of by several characters in the game - and the wings are symbolic of Klonoa's ears that he uses to fly (sure it's only for 2 seconds, but it still counts). We can also see this symbolism in the statue of the MG Claire: she has wings that mirror the symbolism of those in the priestess' emblem, and the ball of energy she has in her hands is similar to the ring. The statue of Claire The Ancient has a striking resemblance to Lephise - and the fact it hides The Fifth Kingdom is similar to how the Moon Kingdom was hidden in the first game. Klonoa literally has to overcome his sorrow and accept it, in order to continue with his life."
Most of this is believable and quite intriguing, so I recommend reading it all.
