Heavy Spoilers
Do watch the series, it's very good. A lot of people are saying it's a sad ending but it actually has a very good, albeit unconventional, happy ending.

Spirealm ended with seemingly “it was all a dream” type of ending but my interpretation of the ending was that Lin Jiu Shi , through the act of completing the game, “saved” the game as his childhood friend intended. “Saving” the game in this scenario, reverts all the tragedy the game has caused without erasing anything that’s happened… kind of. The way the story goes about it is a little convoluted but through picking up the themes of this story, is not indecipherable.
Proving that the game did all happen; there are three main points that infers this. The first, most tangible point is that, at the end of the series, LJS wakes up in the middle of the traffic. Assuming everything that’s happened after the traffic accident at the end of the series was dreamt up, it does not explain why the internet cafe boss at the beginning of the series– who’s seen the game before the traffic accident– has no recollection of LJS having played the game. The second point, if everything in the game had not happened, it would make no sense for LJS to accurately know the name of people he’s never met before. The third point, which is the most confusing one, explains one of the main themes and why the director probably chose to take this route.
One of the main themes of Spirealm is the legitimacy of the “virtual world”, where the characters have debated multiple times if everything that happens “virtually” in the game is real or not. I forgot which episode it was but, LJS in the latter part of the series pondered “If the feelings in Spirealm are more sincere than real life, what really is the difference between virtual and reality?” ( Also not a direct translation, I’m too lazy to go find the exact episode and translate it) The point of this quote is, even if the memories don’t exist anymore, the feelings and relationships that were formed during the time in Spirealm were “real” and sincere. We can see this through the way Chen Qian Li fhaving familiarity towards LJS at the end of the series, despite acknowledging that he doesn’t actually know him. This is a little more debatable but you could also argue that the differences between the depiction of the people around LJS before and after he woke up also shows the effects of the game. One could interpret Tan Zao Zao being an influencer instead of an actress as something unconsciously influenced by the events of Spirealm. While being in Spirealm, TZZ felt like she constantly had to mask herself as an actress, you could argue that her being a influencer instead of an actress in the new world as a choice she made unconsciously due to the feelings of restriction she’s felt in Spirealm. Same with instances like Chen Yi Xie watching horror movies as a hobby and Li Dong Yuan being content working as a street vendor that makes little money.
In the last scene of the show, when LJS goes back into Spirealm, he sees TZZ where she tells him “it feels like I woke up from a long dream”, referring to life outside of the game. This further emphasizes how the game is actually “real” too, since when LJS is outside Spirealm, Spirealm is referred to as a “dream”. Whichever reality they are in is the real one, so by proxy, they are both real.
Another point to consider is the relationship between LJS and RNZ. If everything was a dream, then essentially, LJS dreamed up a lifelong companion (boyfriend) in elaborate detail seemingly out of nowhere… It makes more sense if RNZ did exist, but was simply erased from existence due to the game also having been erased. The whole last arc of the story also repeatedly states that he would be erased once the 11th door was complete.
The game bringing people back to life, erasing everyone’s memory, and altering reality also seems entirely reasonable when the whole basis of the game is based on its ability to kill people and warp time. Realistically speaking, there was no real way to depict RNZ and LJS saving the game besides erasing the game completely, therefore, the erasure of everyone’s memory and the game’s existence is the intended effect of “saving the game”.
I also believe that LJS reprogramming the game essentially is the equivalent of him fulfilling his friend's wish of “restoring the game to its original state” as the game he ended up recreating was essentially the original intended game.
I believe that the ending of Spirealm was the perfect happy ending, Everyone is alive again, they get to live their life to the fullest, and in the end, LJS finishes the game where he likely decides is his new “reality” with RNZ. They all live together happily as Chen Qian Li wished for in the 11th door. This is the 12th door, LJS’s completed door of happiness.
That’s mostly all I wanted to say, I’ll probably rewatch the series when Subs (that are comprehensible) come out so I can make exact quotations and give actual episode numbers (plus there are probably more things I have missed). But for now that’s all I’ve wanted to say. I’m open to debate the ending since I feel like the ending was definitely left a little ambiguous but I feel like a lot of these things were changed from the novel with the intent of creating this ending specifically. (ex. Slight novel spoiler: TZZ being a famous and acclaimed actress in the Novel while being mildly unpopular in the series)
Add my discord if you want to talk about this show with me, it lives in my head rent free: krudy7kk

TLDR: Spirealm was not a dream, everything that happened got erased due to LJS completing the game. Everyone gets transported into an altered reality where they are living their happiest lives (indirectly bc of games events) and LJS reunites with everyone towards the very very end where they all live peacefully together.