The game also has a spooked mechanic (hence the name) where every time you are "spooked" three times your perception of the house changes into what's considered it's "true" form (you get spooked by being killed by monsters or failing puzzles). It's also called Spookovision. In this perspective everything looks more horrifying and new monsters are encountered. The environment is heavily inspired by the Silent Hill franchise. To return back to "normal" you need to look at Magnificent Maggot's cat picture, Meewee.
Another mechanic is that every time you die you just wake up a few seconds before, only getting spooked.