Cloudbank is a highly advanced city where the people are able to change anything, right down to the color of the sky.

It appears to be fairly progressive socially, as women hold positions of power, while Grant and Asher appear to be married (they carry the same last name, are very close, and are clearly not related). It does not appear to be utopian, however, as the Transistor entry for Bailey Gilande (whose gender is listed as X, rather than M or F) mentions that she had to deal with "social challenges".

Since Cloudbank is more technologically advanced than our world, and technology drives cultural change, terms and ideas which are ordinarily associated with computers in our world are expansive and commonplace (much like how gun and automobile references pepper our conversations today, despite these technologies having been around for less than a thousand and a hundred years, respectively). So, for example, with the increased importance of computers in Cloudbank, those who keep their systems running properly (administrators) become public servants (while phrases like "Empty Set" and "Hello World" enter common use).

The city is run by direct democracy (that is, everyone votes for everything). In theory, this means that Cloudbank is what the people want it to be. In practice, it means the city is in constant flux according to the whims of the people that day. In fact, things tend to go in cycles. For example, one day the people might want a bridge at location X, but this leads to them wanting it replaced with a school, which then leads to them wanting a shopping mall there instead, and so on until they eventually want it to be a bridge again. In the long run, nothing ever really changes (though few people ever notice). This is the source of the Camerata's creed "when everything changes, nothing changes".

There are a few lines of dialogue which imply the existence of an outside world with people. The narrator mentions skipping town twice (there are apparently roads leading out of Cloudbank), and he says that people say one can be whatever they want "in this town" (which would make little sense if Cloudbank was all there was). However, we never get anything more than that.

There is a popular hypothesis that Cloudbank is not actually a real city, but a virtual one. This may very well be true, but it is beyond the scope of this examination, as it ultimately makes no difference to the story. Whether their world is physical or not, it is still the characters' world, and the events there affect them the same either way.

Historically, the more advanced the civilization, the more work is handled by tools. It could easily be argued that in modern industrialized nations, it is the machines that are doing most of the work. It is therefore only logical that in an even more advanced place, machines would do even more.

Such is the case with Cloudbank. Whenever the people vote on something (say, the construction of a new railway), it is the Process that makes it so.

The Process seems to exist primarily for the purpose of turning the city into whatever it is ordered to, and they seem to attempt to do this with maximum efficiency. As a result of this, their default behavior is to convert anything they can find into whatever state they consider most efficient for future construction (in other words, a blank slate). Only the influence of the Transistor prevents them from doing so.

One of the narrator's statements in Grant and Asher's hideout implies the Process was let into Cloudbank by the Camerata, but Royce implies it was there all along, working in the background, and he simply brought it to the forefront.

Given that OVC terminals (along with Red and the narrator) refer to the Process as such despite never having been told the name by the Camerata, it seems likely that the people of Cloudbank are dimly aware of the Process (but probably in the same way that the average person is aware of electrical circuitry; they know that it is important, but have little understanding of how it actually works).

Since they are machines, Processes are neither good nor evil. They simply carry out their programming. They do, however, seem to instinctively copy creatures and behaviors that they have seen (Cluckers have organic-looking legs; Youngladies and Men appear humanoid; Fetches are clearly canine). They appear to have a particular fascination with Red near the end of the game (waiting for her to sing and clapping; taking pictures of her posters). This is likely either a result of her being the Transistor's current owner, or is an attempt by the Process to mimic people's fascination for Red.

The origins of the Process are a mystery. There is one line by the narrator after finding Grant and Asher that implies the Process is not from Cloudbank (he mentions that they seem to like it there more than wherever they came from). Ultimately, though, the origins of the Process are irrelevant. What matters is that they exist.

The Transistor is the master control system for the Process. As long as it has a connection with the Cradle, the owner of the Transistor can use it to command the Process to construct whatever they desire.

The Transistor also possesses the ability to increase its functionality. This is normally done by integrating the "trace" (soul) of a recently-deceased individual into it. However, we know from Grant, Asher, and Royce's functions (which can be unlocked before their deaths and list them as "recorded" rather than "integrated") that it is possible to derive a function from someone without killing them.

People who have been integrated into the Transistor find themselves in a virtual world within the Transistor. It is normally not possible to leave the Transistor, but it is possible for such individuals to see the outside and communicate with people there, provided that the two know each other well enough.

The Camerata is a secret group which felt that the constant cycles of Cloudbank made the whole thing rather pointless. Therefore, they felt it necessary to enforce some sort of stability on it so that they could guide it on the path they felt was right. However, since Cloudbank is run democratically, they would need a way to bypass the system and control the Process directly. Royce's discovery of the Transistor made this possible.

And so, the Camerata began carefully cultivating the Transistor's power by integrating into it individuals who either possessed great talent or had gotten in the Camerata's way.

Obviously, the risks involved in the Camerata's plan were such that they were inviting doom upon themselves and Cloudbank.

The short answer is that Sybil got jealous.

As far as Grant, Asher, and Royce knew, Sybil had given them a prime target in the form of Red. However, when they attempted to assassinate her, the narrator unexpectedly intervened and was integrated instead.

However, it wasn't truly unexpected. As it turns out according to Sybil's Transistor entry, she was infatuated with Red, and therefore likely had no desire to see her dead. However, Red was not receptive to Sybil, and Sybil believed that this was due to the man that constantly hung around Red. Sybil told the Camerata where Red would be, and told them she was alone (knowing that the narrator would be with her) in the hopes that they would remove the problem for her (which would actually imply that Red is bisexual, since that is the only way that killing the narrator could possibly lead Red into Sybil's arms).

The narrator was integrated, as expected. But what came next was anything but.

We all have that friend or coworker that doesn't use social media, or doesn't own a cell phone (indeed, you might even be that person). There are people in our society who have no mailing address, no credit cards, and in a few cases even no social security number. These are the people who live "off the grid".

The narrator is the Cloudbank equivalent of that. According to his entry in the Transistor, the narrator possesses no selections (confirmed by him when he mentions at the selections office that he can now put it off a while longer) in a city where 0% of the population willingly chooses such, and there is therefore no census data on him to draw from.

It is likely for this reason that the Transistor becomes corrupted when it absorbs the narrator's trace (fittingly enough, his function ends up being related to his ability to reach places he isn't supposed to). This results in Red's voice being absorbed as well (which is why she has a function), the two of them (or rather, she and his body) and the Transistor being teleported away, and ownership of the Transistor being transferred to Red.

However, the most important thing that happens is that the Transistor loses its connection to the Cradle. This causes the Process to go out of control and begin converting everything it can find to a blank slate. So, for most of the game, the Transistor is equivalent to a computer without an internet connection.

Obviously, stopping the Process simply requires returning the Transistor to the Cradle so that the connection can be reestablished. However, in their hubris and panic, the Camerata do not immediately seek Red's assistance or explain the situation to her. This failure ultimately dooms Cloudbank, as it forces Red to spend most of the story on a wild goose chase instead of stopping the Process. It is only after she discovers Grant and Asher's corpses that she is able to finally learn what needs to be done.

The available evidence suggests that Red does not have a very high opinion of Cloudbank. Both "Signals" and "We All Become" appear to be criticisms of the system that the people of Cloudbank live under. Her function (Crash) is all about disruption. She also goes through multiple revisions of anything she types, trying to make it less controversial (suggesting she has been moderated many times).

Then there is Red's Transistor entry to consider. The fact that she needed to specify that her music was never meant to stir controversy (when she had previously said it spoke for itself) implies that it ended up being quite controversial indeed. This is supported by the incident where Red was attacked by someone claiming her to be an instigator and provocateur.

Finally, throughout the entire story, Red consistently refuses to be controlled by anyone (including the narrator, who is only looking out for her safety). The only time she goes along with the plan is when Royce presents her with no choice.

All of this paints a portrait of a woman with a strong will that does not allow others to make decisions for her. In other words, she is somewhat of a rebel.

Ironically, Red's fame means that despite her dislike for the way Cloudbank works, she is inextricably tied to it. This may go a long way in explaining how her relationship with the narrator began (as he carries no ties to Cloudbank despite such a thing being unthinkable). Furthermore, it gives new context to the narrator's offer to leave Cloudbank after they have stopped the Process (he is, in effect, offering her the life she has dreamed of).

The Spine is an extremely large Process. We know this for four reasons. The first is that the Bracket Towers Gondola notes that there is a "large process" detected (Bracket Towers is where the Spine is). The second reason is that the Bracket Towers Viewpoint has one "large process" sighting just as the Spine is there. The third reason is that the Spine spawns cells. The fourth reason is that during one of the hammock musings while the second Spine is around, the narrator speculates in reference to the Spine that when the Process grows large enough, it causes him to black out (narratively speaking, there is no reason for an explanation of it to be provided without it being proven wrong or an alternative presented unless that explanation is the correct one).

This is analogous to how a computer will slow down if a program (or process, as they are usually called in that context) becomes too large in terms of memory (remember, the Transistor is the master control system for the Process).

It is also worth noting that there is no reason to believe that the narrator is special with regards to the Spine's effect. Anyone else in the Transistor would be affected the same way (but Red wouldn't notice, because she cannot hear them to begin with).

The other big mystery of the Spine is why it appears to be from one of Red's songs (we know "The Spine" is canonically one of Red's songs because it is possible to get the narrator to sing it while he's under the effects of the second Spine). There are two potential explanations for this.

The first possibility is that the Spine has nothing to do with Red's song (and it having a heart is merely coincidental), and the narrator just happened to choose that name for it in reference to one of Red's songs. Certainly, he is the only person who ever calls it by that name (the OVC terminal refers to it as everything except that).

The second possibility is that the Process (which later on is shown to be either fascinated with Red or at least intent on mimicking such) constructs the Spine as a reference to Red's song, in much the same way that they mimic other aspects of humans, their behavior, and their culture wthout truly understanding them (certainly, a machine would not understand the meaning of the song, and so it would make sense that they would mimic it by creating a literal "Spine of the World").

The Man is perhaps the most threatening non-boss enemy in the game. Royce was unable to determine their purpose, and was unnerved enough by them that he put safeguards in place to weaken the Process (when you "use a limiter" you are actually turning these safeguards off).

Every Process has a clear purpose, and their form reflects it. Jerks attack by pounding the ground because they are designed to pave things over. Fetches are literal guard dogs intended to defend other Processes as they work. Youngladies take a form that represents fertility because they produce and nurture the cells that will become new Processes. The Man appears to be the only Process that does not possess a job that is related (directly or indirectly) to deconstruction or reconstruction. Furthermore, when Men start appearing, the other Processes cease to do so.

The lack of Processes that build or demolish in Fairview can only mean that Fairview has been fully processed. Therefore, the Man must exist for the purpose of filling in for something that the new Fairview would otherwise lack.

That thing is, of course, people.

The Process does not view human beings as people (or anything else as people, for that matter). It simply views them as components of a system (in much the same way it views itself).

And like everything else in Cloudbank, the Process sees room for improvement.

The Men are meant to be more efficient replacements for the humans that the Process is wiping out. Like humans, the Men come in different colors, have different skills that complement one another, and are capable of great violence against friend and foe alike (Men can be harmed by haircuts).

Of course, Men do not possess a human mind any more than other Processes do, and are capable of only superficial mimicry. They do not have desires, and therefore cannot decide that they want Cloudbank to be something else. Therefore, the replacement of everyone in Cloudbank (and the world, for that matter) would lead to the Process never receiving orders again. Unfortunately, the Process is incapable of understanding or caring about this fact. It can only carry out its programming to the best of its ability.

When Red returned the Transistor to the Cradle, she and Royce were too close, and were absorbed into it. As it turns out, in that specific set of circumstances, it is possible to escape the Transistor (likely because they weren't truly integrated like the others). However, it requires that one defeat someone else who is trying to escape. So, they have their battle (with their own virtual transistors), and Red wins (if you pay attention during your turn, you can see that the tanks actually contain the traces of people in the Transistor, implying that this area is somehow a special part of it).

With Royce beaten, Red is returned to Cloudbank with the Transistor. The Process has been stopped, and Red now has the power to remake the city as she sees fit. However, the sheer amount of time it took to get this far means that everyone in the city but her is dead. So, after testing out her ability to contruct things on the bridge, she immediately attempts to resurrect the narrator, only to discover that raising the dead is beyond the Transistor's power.

So, where does that leave Red? What can a lone woman do except wait to die? Why rebuild? A city without people is just a fancy tomb (and she never liked the city itself much anyway). If there are people in the outside world, Red has almost certainly saved them, but they don't need her, and she doesn't care about them anyway.

There is only one thing Red cares about. In her own words, the narrator is all she has.

If she cannot bring him back, then there is only one logical thing for her to do, and that is to join him in the Transistor, so that they can be together forever.

She does so, and they meet in the Country (a euphemism for death in Cloudbank). Reunited with both her voice and the man she loves, Red gets to "live" happily ever after.

There is a somewhat popular idea that Recursion Mode is actually canon (with Recursion Mode's Cloudbank being a new Cloudbank inside the Transistor), because a few things change (most notably the fact that the first line is said by Royce instead of the narrator).

However, there are many problems with this idea.

The first problem is that at the end of the game, Royce is left in the Transistor, not a recursed one. He wouldn't be trapped in the "new" Transistor any more than Red or the narrator would.

The second problem is that there is no actual logical connection between the ending (Red and the narrator meeting in the Country) and the two of them finding themselves in a new Cloudbank (whether it's in the Transistor or not).

The third and largest problem is that in order for Recursion Mode to make any sense canonically, the story would have to be different, because the plot of the game is driven in large part by ignorance. Red is unable to save Cloudbank in time not because she lacks the ability to do so, but because she lacks the knowledge to do so. If Recursion Mode were canon, Red would have no reason to go after Grant and Asher in the recursion (if nothing else, she would know how pointless doing so would be). Instead, she would immediately start looking for a way to Fairview so that she could stop the Process in time to save the people of the new Cloudbank. Yet that does not happen. The story progresses the same way as before, which is not what would be expected if Recursion Mode were canon.

The final problem is that according to the creative director of Supergiant Games, they are satisfied even if players only play through the game once, because they will have "finished the story". If Recursion Mode isn't part of the story, then by definition it cannot be canon.

So then, why does Royce say the game's first line in Recursion Mode?

In computer programming, recursions start with a bracket of some sort (such as "{" or "[").
Royce's last name is Bracket.

In other words, it's an easter egg; one last programming reference for the particularly savvy players out there (a group to which you now belong).