Basically before all that jazz(deku dying and a self sacrificing baku), bakugo was hit by a quirk in the REAL WORLD. When he was in a coma, he dreamt that deku should just disappear bcs he’s irritating(but we all know that he didnt really MEAN it. It’s just him being his usual angsty angry bitch that he is), but the quirk dream power must have misunderstood and granted him what it thought to be Bakugo’s wish...so instead of having a pleasant dream, it backfired and he ended up in his worst nightmare and ultimately loses himself. In the end, he wakes up instead of staying in the coma state eventho the quirk was supposed to have given him a “very pleasant dream” so he could stay in the dreamworld and never wake up(said by Kiri). And thats why deku is alive at the end because the first half was all a dream/nightmare.
i kinda don't like that hwan anymore, creepy ass mf-- RED FLAG!!!!