Simón has a bad case of night terrors; Laura explains to her child that the decrepit lighthouse nearby watches over them with an "invisible light," even though it hasn't worked in years.

A social worker named Benigna (Carulla) comes by, not to check on conditions at the orphanage before any kids are to move in but to check up on Simón, who, it seems, is a child with special needs.

While exploring the beach near the orphanage with his mom, Simón claims to have met a new little friend who lives in a cave right by the tide line. Simón leaves a trail of shells from the beach to the orphanage, so his new little friend, whom no one else has seen, can find his way to where Simón lives.

Laura and Simón talk about Peter Pan, and Simón seems especially interested in how it can be that a boy can never grow up. Simón mentions that he now has quite a few new little friends who will never grow up, and there's this neat game that they play. ...

A haunting movie that gambles big

What gets overlooked in most movies about ghosts is that for every dead person who lingers as a spirit, there's a death, a terrible loss. The Orphanage, with its backstory about orphans and abandonment, deals with loss aggressively, brutally and touchingly. It's easy to make a ghost movie about an otherworldly presence. Look at the dumptrucks full of by-the-numbers Asian movies with bogeys coming out of electrical devices. With The Orphanage, director Bayone and writer Sánchez have made a movie about a haunting that is an otherworldly absence.

The Orphanage has another thing going for it that sets it above most movies about hauntings. While we expect ghosts to inhabit domestic spaces—houses, monasteries, creepy old bell towers—The Orphanage presents its haunting not just in the titular orphanage but in the area around it. The landscape itself becomes "alive" with the haunted. The gardens, the beaches, the caves around the Hill House—like place at the center of the narrative—all get visited by ghosts, and the effect is unnerving.

That is, of course, assuming there really are any ghosts. As a character-driven movie that owes a lot to early-1970s arthouse fare by Luchino Visconti, Carlos Suara and Victor Erice, The Orphanage makes room for doubt as to whether Laura and her child are imagining the ghosts they encounter. The movie gambles, and it gambles big. If the ghosts are real, well, the end result is emotionally devastating. If the ghosts are imagined, well, the end result is emotionally devastating. The carefully constructed script of The Orphanage manages to hedge both these bets in a way that doesn't feel like a cheat or an easy way out for either possibility.

The Orphanage isn't a perfect movie. One major character just goes away in a manner that just isn't believable so that the climax can play out without said character acting as a fifth wheel. Very thoughtful of that person. There are a couple of dead spots and a few dire lapses in logic. But the ultimate payoff of The Orphanage makes it easy to let these shortcomings slide.