I'm so confused... what is with the ending...?

Like... Aerith is dead. In... this reality at least...? It's obvious only Cloud can see her... like... yeah, Nanaki sensed her when she touched him so she is obviously there in some form... but what about the rift? He's the only one who can see that? Is he living in several worlds simultaneously? It's possible that it's some form of manipulation from Sephiroth, I suppose but for what purpose?