Shuuji snaps after reading Chise's diaries at the observatory. He goes insane and hallucinates she is with him in another form. Chise's appearance and non-human form, the weird wing-like plates in the sky, the attack and the tsunami are all taking place in his mind, making the end of the world a symbol of his lost love. The events in the "white world" and the relived memories are merely dreams within dreams. The world might not have ended and Chise might still be alive, but we don't know for sure. As far as Shuuji is concerned, everything is gone for him.