Limbo/WMG

The boy was "called" to Silent Hills otherworld

 * The Boy cause death death of the Girl probably from a practical joke gone horribly wrong. The other children represent the Boy, they lay deadly traps as "practical jokes" and trying to kill the Boy. The giant spiders and insects represent fears of spiders and insect the Boy (or maybe the Girl) had.

The death of the boy and girl was a horrible accident.

 * The tree house was their tree house. There were two brothers who lived in their neighborhood, one big and one small, who were always mean to the Boy and Girl. The brothers went up into the tree house and wouldn't let the boy and girl in. When they tried to climb up the ladder, the brothers cut the rope ladder and they fell, breaking their necks on the ground.
 * The brothers are the first two humans you see in the game, the ones that roll the burning trash down the hill. The other humans in Limbo are different forms of the two, each trap representing a way they would bully the boy and girl.
 * The rope ladder is severed and there are two corpses lying a the bottom.
 * The brothers either ran away after realizing what they did, or they were stuck in the treehouse and starved to death.

The entire thing was indeed a dream.

 * The boy is actually hallucinating, which is some sort of limbo between sleeping and being awake. The entire adventure was actually the boy stumbling around. That's why the boy never runs out of lives; he never died in the first place. The fall through the barrier in the ending represented him waking up. The title screen is actually another hallucination.

The Boy is the same one as the boy in Wii version of A Boy and His Blob

 * Not only did the Boy have Blob, but he also had a sister and another smaller treehouse. He wanted to show his sister that treehouse but we all know what happened.

The Boy and The Girl were child factory workers.

 * The two of them worked in extremely unsafe conditions for many hours, practically slaves, and eventually ran away. They left the factory, ran through the city (perhaps attempting to escape factory security who were ordered to return any escaping workers), into an abandoned storm drain system, and then into the forest surrounding the city. A forest where vicious orphaned children lived, along with a particularly deadly species of spider. Either by the other children or a spider's poison, the Boy and Girl both died. The Boy's spirit, unable to rest because of this grisly fate, searched through a Self-Inflicted Hell to find his sister. He may have believed her to be back at the factory, and thus took his trip in reverse to try and find her. Besides the mind control worms (representing a lack of freedom he experienced at the factory), the things that prey upon them (representing defiance to that lack of freedom), and the spider (represented as a huge monster because it killed both him and his sister, and was warped by his perceptions and expectations as a child of what a lethal threat should look and act like) things remain relatively realistic through those parts of the game. And then he reaches the factory. He finds his sister, but cannot reach her due a mind control worm. When he gets rid of it and returns, she and their treehouse are gone, replaced by more of the mechanical hell that came before it. It may be at this point where his mind begins to crack under the stress of not finding her, and things start to mesh together. From that point on in the game, it cycles through far more surreal versions of the forest, drains, city, and factory. While technology remained mostly (the neon hotel sign being a possible exception, but it is hell after all) consistent for the potential time period up until this point, things start to change, and technology that did not exist at the time of the Boy's death begins to appear (electric rails, machine guns, high tension cables, anti-gravity generators) along with things that break physics as we understand it. It quickly turns into an insane smashed together version of every area, and near the very end the direction of gravity begins to switch on its own, showing the true breakdown of reality as it exists in the boy's eternal punishment. He breaks through a wall of glass, symbolizing his mind fully breaking under the stress of it all. He can finally take no more, and just creates an sublime area in the forest with his sister and the treehouse to try and realize his goal. But it's just a lie, and he knows it. He awakens in the dark forest once more, his only memory being that of a sister he wishes to find. So the tale starts anew, with no other memory of before due to being mentally broken each time, and the boy goes looking for his sister again and again. Forever.
 * Well, there are child soldiers in the game after all.

The boy is journeying through a purifying stage of the afterlife that all souls must complete.
The "Limbo" of the game's title is not necessarily the limbo portrayed in the judeo-christian religion; it is a purgatory type stage of the spiritual world between life and the afterlife where one's fears and/or sins are confronted, and must be passed in order to continue on. This limbo stage is different for every individual who journeys through it, but forms itself into environments that each individual fears.

Because the boy died, he must travel through it, but even though he's just a child, he is not exempt from the purifying process; it must be impersonal in order to fairly accommodate everyone who goes through it, and show no favorites. Thus, while journeying through Limbo, the boy confronts his fears. Among them are: bear traps, spiders, bullies (the shadowy figures he encounters who are constantly trying to kill him), someone taking over his mind (the mind worms; perhaps he was frightened by a magician who said he could hypnotize the boy) fire, drowning, electrocution, heights (the top of the buildings), big impersonal buildings (factories), loud machinery (buzz saws), darkness, loneliness, guns, and disorientation (gravity switches). Once he manages to overcome these obstacles, the boy falls back into Limbo's neutral state (ground with nothing about it). While falling, Limbo reforms itself into a forest, and from there, the boy is allowed to pass on to whatever lies beyond limbo.

While journeying through this world, the boy must continuously head towards the light, as it represents God/purity/heaven, and is used as a good thing throughout the game (either in showing the way the boy has to go, a butterfly of light leading him in the right direction, burning mind bugs, the shaft of light that shines on the boy while breaking through the glass, etc.). Because none of the other children have light in them (the eyes) they are not real, and manifestations of the boy's fears. It is unclear if his sister his imaginary (she could be a manifestation, or we are simply unable to see her eyes), but upon reaching her, a sharp beam of light shines down on them both, suggesting that the boy can move on.

Based on this theory, and on the obstacles the boy confronts, it can be theorized that he lived in the suburbs near a giant forest, and a large city. He was bullied constantly, his father was a hunter (based on the bear traps and guns), the boy occasionally ran into spiders while playing in the forest, which was also where his beloved treehouse was. His mother lived in a factory that he once visited, only to find terrifying, and subsequently never went to again. One day, while out in the forest with his sister, something happened that killed either both of them, or just the boy (if it was just the boy, he wouldn't know that his sister died), and upon waking in Limbo, finds himself in a world that's been exaggerated to accommodate his fears.

The Boy is a Wraith.
He's stuck in the shadowlands, and all the enemies in the game are Spectres. The obviously nonhuman enemies are just umbral spirits looking for a quick snack. He achives transcendence by the end.

They died in an a car accident.
Which is what the glass breaking at the end represents.The boy was in the front seat, didn't wear a seatbelt and was flung through the glass and died. The sister has either already completed her limbo and was waiting for the brother to complete his limbo, or that she was too young and pure to have been in Limbo at all and that once the brother reached her they would leave Limbo forever. All the levels represent the area they lived (like the City + Forest).

When he came to Limbo, the kid gained Super Strength and Parkour abilities because of his snazzy haircut.
Total Biscuit approved.

The boy is Calvin.
He and Susie were both killed in a G.R.O.S.S. club prank gone awry. The prank in question involved scaring Susie with maggots and a toy spider both of which manifest as the brain-infesting worms (which symbolize Calvin's guilt for accidentally killing Susie, hence the reason the worms often lead you to your death) and the giant, kid-eating spider (symbolizing Calvin's anger at the injustice of his premature death). The tribal spear-wielding children who antagonize you are Calvin's memories of being bullied by Moe. Susie, being only an innocent victim of the tragic accident, only has to sit and wait for Calvin to complete his trials so they can both move on. Hobbes does not appear because he is a stuffed toy and thus cannot be killed.

The boy was responsible for his and his sister's deaths, though his sister dying was an accident.
Maybe he insisted on trying to climb a rope that would never support both of them and they broke their necks. Maybe they got into an argument and he pushed her out the tree-house on accident, then jumped after her. Whatever the case, it is somehow the boy's fault that he and his sister died, which is why we see him traveling through the outer edge of Hell as opposed to his sister. Because it was an accident, he wasn't sent to Hell itself, but he still needed to go through the outer edges of it because he was still responsible, and perhaps took his own life afterwards. Part of why he's trying to find her is to just say he's sorry...

The giant spider is still alive.
It didn't die after losing its first seven legs. It's doomed to sit in a ditch and forever be used as a platform by those who follow the same path as the boy. And since it can't communicate, it can't do a thing about it.

The boy is actually in a beautiful fantasy world, and only needs a flashlight to illuminate the truth.
[http://www.dorkly.com/video/33102/limbo-with-a-flashlight See? Those children aren't so evil after all!]