Hugo/WMG

During World War Two Hugo'll be involved in espionage and maintaining contact between La Résistance and the Allies.
He has dual French/British citizenship and is highly skilled with both delicate machinery and self-concealment. Really, he couldn't be more perfectly set up for this if the intention was to create a super-spy.
 * The Station Inspector assists him (because the thought of a comically officious but mostly endearing character like that collaborating with the Nazis isn't terribly fun) and in this universe, Hugo's presence, as well as that of Isabelle (who has matured somewhat beyond her need for sheer adventure, and understands the gravity of what she is doing) changes the course of the war.

Hugo is entirely dreamed up by Cobb from Inception
Note: You're not going to get this WMG if you haven't seen Inception.

The entirety of Hugo takes place in Cobb's subconscious. Hence in Hugo the constant talk about movies as dreams, the fixation on trains, the dream-within-a-dream scene, and Hugo's nocturnal anxiety attack over his own realness. Also, the surreal way that events from Hugo's favorite movies then actually happened, like dangling from a clock face or nearly being hit by a train, suggests a dream state.

After Mal's death, Cobb regressed to a childlike persona, fleeing into a fantastical dreamscape based on the city, Paris, where he first met his wife. Cobb's talent with dream architecture and meticulous timekeeping is visually represented by his clockwork world. Like himself, his dream persona, Hugo, is incredibly lonely, emotionally damaged, and feels desperately lost. Hugo's grief for his father is a reflection of Cobb's grief as a father.

Cobb creates a younger, idealized Mal as a projection in the form of Isabelle, who, like her counterpart in Inception, is a thoughtful French girl who escapes into fiction from the banality of real life. This Mal projection serves as a companion, assuaging his loneliness. A younger projection of Miles shows up as Tabard, and like his Inception counterpart, is a Parisian professor who makes the visualization of dreams his life's study. Precise names and faces differ because Cobb instinctively know the danger of recreating real people exactly.

Papa Georges is a projection of older, cynical Cobb, whose life's work of dream creation has only led to heartbreak. Restarting the automaton is a form of inception, convincing Papa Georges, the jaded part of Cobb's subconscious, that his work is vital to the world.

Mostly everyone was a robot.
After he stopped making silent films, Georges Méliès wanted a more simple life like in his movies so he made a Bioshock meets Professor Layton and the Curious Village type city with his wife. The trains only go around the city. Nobody noticed because few are sentient and the ones that aren't like Hugo and the Station Inspector are programmed not to notice. That's why the book said Georges was not alive. He went into hiding, using the idea of the window stage to create a steampunk dome like in The Truman Show using the profits he made from the movies. Isabelle was the daughter he never had. The Robot Hugo found was a prototype that Georges made.

The clock tower was an electricity generator that ran the town. Like in Dark City. Hugo was picked by Georges because he was made sentient with implanted memories. That's why his father's fire memories looked so odd and had the film sound. It also explains why the uncle disappeared for many months without anyone questioning or finding him. That first morning we see him is the first day he was activated. Georges kept watch at the the toy shop, making sure that Hugo was doing his job. When Georges was talking about movies being dreams, he was right. And at end he either took Hugo to the real world or he watched the movie with the other robots inside the dome. So basically the movie is a mixture of Kingdom Hearts, The Big O, Dark City, Blade Runner, and Inception based on trans-humanism for kids. Awesome.

Hugo was adopted by the Station Inspector and Lisette, not Méliès.
It makes sense, especially after Gustav the Station Inspector's rant about being an orphan and not needing a family - but he softens right up when Lisette is watching how he treats the boy. By the end of the movie, they're at both Méliès' premiere and the after-party, meaning they're more than just passing acquaintances of the family and Gustav is one of the "good guys" now. It also allows Hugo and Isabelle to be raised in separate households, preventing awkwardness when they get older.

The station's paymaster is fiddling the books.
One of the problems with Hugo's 'uncle' having drowned months before being found (thus forcing Hugo to maintain the clocks alone and steal to eat) is the question of why no one noticed his pay was never collected. After all, a known drunkard is still going to remember to turn up for his pay, if only to buy more booze. The answer? Either the paymaster was already crooked, or was otherwise not disinclined to a little light fraud - when a member of the station staff doesn't turn up to collect his pay, it is quietly pocketed and marked down as being collected. This is not dissimilar to a fairly common piece of real-world tax fraud.
 * Turns out Hugo was collecting them. They're in a pile on the table in his room.