THE WOLF HOUSE tells an allegorical fairy tale reminiscent of those of the Brothers Grimm in a unique stop-motion/2D animation style that is as indescribable as it is spell-binding.
The story, though very simple, veers into the surreal fairly quickly, making it hard to discern what the movie is all about. It does not help that the hints strewn throughout are subtle, that the movie freely switches between German and Spanish (though it has English subtitles), and that a knowledge of the historical context is essential to appreciating what the movie is trying to say.
So here is how I would explain it:
In short, my understanding of the movie is that it exposes and indicts the evil of a fascist mindset by letting it speak for itself.
Now to the details.
SPOILER ALERT
Before the movie proper, we see a prologue in the style of a restored older movie which owes much of its inspiration for its bucolic and harmonious atmosphere to Nazi propaganda films.
We are shown an idyllic community in the southern part of Chile, a colony of happy people in traditional clothing working, helping and singing, along with serene scenes of nature, farmland, livestock and pies. The colony even has a motto:"Helping makes Happiness", which, however, uneasily echoes "Arbeit macht Frei" ["Work makes Free(dom)"], the infamous slogan which adorned the entrance to Auschwitz and other Nazi labor and concentration camps.
The narrator identifies himself as the "shepherd" of the community and tells us that the film we are about to see is meant to dispel "horrible rumors", a "dark legend", that have plagued it. This tells us that the movie is trying to convince us of something, and is not necessarily objective.
The movie begins by briefly recounting how a young girl, Maria, lost three pigs, and upon the prospect of punishment, chooses to flee the colony instead. It is at this point that we are properly introduced to the unique artistic style of the animation.
The animation has a disorienting effect in at least two respects: first, a lot of times, 3D objects, including the main characters, are represented at various points by 2D animations on background walls, and second, everything undergoes a continual process of change, flow and transfiguration.
I interpret the first to mean that often, the movie is merely showing us a literally shallow representation of a thing. The failure to grasp the fleshed-out 3-dimensional richness of something is a shortcoming which reflects something about the narrator, since this telling is not meant to be objective but reflects the narrator's point of view.
I interpret the second as a device to impart a dream-like aura to the entire story, since it resembles what often happens in a dream: things or people at one moment may "morph" into other completely different things.
Maria is chased by a wolf but finds an empty house with two pigs, and decides to make it her home. She also decides not to eat the pigs but instead to care for them. While the wolf outside is trying to persuade her to come back to the colony, Maria's new dwelling slowly transforms into her dream home.
Upon her command, the hooves of the pigs transform into human hands and feet. She tells them her name and that she is "a mother, an angel; Maria is care and love". Then she decides to give the pigs clothing, and shortly after that they transform into full-fledged people, albeit with ethnic features and black hair. Later, she gives a choice to be "better, stronger, healthier and more handsome" or to "stay small and ugly", and they transform once more, into the Aryan ideal, with blonde hair and blue eyes, indeed like Maria herself.
Shortly after this last transformation, Ana and Pedro begin to distrust Maria as she realizes that she needs to go out and search for food. They convince her not to go out and before long she finds herself tied to a bed, and realizes that Ana and Pedro are getting ready to eat her.
She implores the Wolf to come and rescue her, which he does, albeit in a very impersonal manner: Ana and Pedro transform into trees, recalling an earlier tale Maria tells about a tree with a hole near it into which animals would happily fall and get eaten.
In a sort of epilogue by the narrator, we find out that Maria finds her way back to the community, helping and presumably living happily ever after, and "taken care of". A cheeky concluding remarks invites the audience, whom the narrator calls "pigs" to join the colony to be "taken care of", against an animation that looks ominously like the entrance to a concentration camp.
In terms of analysis, the prologue is essential for understanding that this is a tale told by a fascist with a fascist value system, self-conception and outlook of life.
The historical context is that there is an actual colony in Chile founded by a German Expat who fled Germany over child molestation charges. His name was Paul Schäfer, whose last name translates from German to "Shepherd".
Without going into too much detail, Schäfer founded the colonia Dignidad ("Dignity Colony") which soon transformed into a cult compound and a haven for escaped Nazis. During the reign of the fascist dictator Pinochet, the colonia was also used as a camp to interrogate, torture and kill political dissidents. Schäfer was eventually convicted both of political and child sexual abuse crimes and spent the last few years of his long life in prison.
So, the movie is the telling of a story in the voice of a through-and-through fascist. From that point of view, a "good" person can only be another fascist, and that is exactly what Maria turns out to be.
The pigs she finds in the house represent uncultured natives which she considers on par with animals. She has a profoundly self-aggrandizing conception of herself: only by her grace of not "eating" them and commanding them to become more human-like do they approach something like humanity.
She attempts to inculcate the persona of loving mother figure into the pigs, while at the same time seeing them as inferior, weak and ugly, so long as they fail to reach the Aryan ideal. These sorts of contradictions reflect the fact that the narrator is biased in favor of turning a blind eye toward them. Lying, or making up a narrative in order to make oneself look better, and specifically more Carina and loving in one's own and other people's eyes, is a key element of fascism.
Though Maria arrives at her situation through an act of disobedience, she is profoundly intolerant of it, as driven home by a story she recites of a puppy which disobeys the admonishment of a loving house not to run to far and gets lost, leaving the house "sad".
This continues this element of a the fascist narrative: any evil carried out, if it is even recognized as such-and a whole lot of evil even isn't-, is something that is absolutely necessary, even if it makes the fascist "sad".
The seemingly unexpected turn where once Ana and Pedro reach the Aryan ideal, they plot to eat Maria illustrates two other aspects of the fascist mindset: envy and paranoia. Because these are so natural to the narrator, of course he is going to expect that once Ana and Pedro becomes something like equals to Maria, they will act to remove her. People who see the exploitation of others for one's benefit as something approaching a duty will naturally expect that others will think likewise.
The wolf is an allegory for the fascist mindset, a hallmark of which is the notion of "eating" others for one's benefit, something illustrated both for Maria when she explicitly considered it upon finding the two pigs, and then Pedro and Ana, once they reached the Aryan Ideal.
For most of the movie, the wolf is presented as an agent of the colony trying to get Maria back, but in the climax, she realizes the wolf was always inside her, though as discussed above, it was already plain for anyone to see if one put the hints together.
So, in the end, the title of the movie refers to nothing other than Maria's abode: she escaped from the fascist colony to make her dream home, but this turned out to be nothing other than a miniature version of the place from which she escaped, a house where she was about to be eaten by the two other wolves she raised.
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