Not for the faint-hearted!

Rating: 9/10 (29 October 2015)

I agree with all other reviewers who have said the 1-star reviews of this film don't do it justice. I'm a horror fan and for the past year people have been urging me to watch this film. I had a day off today and finally watched it on Netflix. I am VERY picky about my horror films and it scared me, which is hard to do. Someone else here compared it to "The Shining;" I'd also cite "The Abandoned" (another GREAT, under-appreciated horror film) and Shirley Jackson's classic novel "The Haunting of Hill House." "The Babadook" isn't fast-paced, isn't in the standard blockbuster horror model, and isn't even that gory. But it is *fantastically* creepy.
****BEWARE! HERE THERE BE SPOILERS!!!*************
At the end of the film I wasn't completely sure WHAT actually had happened. A lot of reviewers here have criticized the ending. However, we have an unreliable narrative here. The mother's perspective has already been revealed as unreliable on a number of occasions - for example, when she "sees" the roaches in the kitchen and in the car (don't forget the helpful-yet-kind-of-emotionally-hurtful neighbour's name is Mrs. Roach) and her experience at the police station. And, as the police suggest, who is to say she didn't create the book herself? Is she drawn into her son's madness, is he drawn into hers, or is the Babadook drawing them both in? There is a psychological term, "folie a deux," for a relationship in which two people who are not entirely stable alone become severely unstable when around each other because they feed off each others' illness (Cronenberg's "Dead Ringers" is a great example of this, as well as the novel "My Brother's Keeper). At first, I thought this was going to be a film about an overstressed mom dealing with an unbalanced child. As the film progressed, her own imbalance became more pronounced (and don't forget she's dealing with severe sleep deprivation through most of the film, heightening the hallucinogenic overtones). I found myself wondering if the sister's seeming hostility was actually foreshadowing the mother's mental illness and if her sister's behaviour was reflecting years of dealing with an unbalanced sister and nephew. The bingo scene also can be viewed in that light; on one hand, it's kind of funny. On the other hand, it may reveal a sadistic streak in the mother's character as she "messes with" the helpless dementia patients.
There is some VERY dark stuff going on beneath the surface of the plot. At first I was very annoyed about the "vibrator" scene - it seemed like a cheap way to shoehorn some sexual content into the film. However, as the Babadook and the madness in the house becomes increasingly associated with the dead husband, I started thinking about a sort of "reverse" Oedipal complex where the mother resents the son for depriving her of a sexual life and sexual satisfaction. Listen with a Freudian ear to the son's repeated statement: "Don't let him in." :P SO MUCH of the horror occurs while the main characters are in bed. While it is *certainly* not unusual for a mother to sleep in the same bed as a young son, especially one who is having severe nightmares and night terrors, that "sleeping together" seems to take on a more symbolic aspect in the film.
So what really happens at the end? Does the mother literally have the Babadook imprisoned in the basement, feeding him phallic worms to keep him quiet? Or has she "repressed" her own insanity into the cellar of her mind? Remember that she tells her son he can visit the Babadook "when you're older" - a stereotypical parental response when kids ask about sex.
*********SPOILERS OVER**********************
This is not a gore-fest, nor is it the kind of "turn-your-brain-off-and-watch-people-being- killed-in-inventive-ways" type of horror. It's creepy, it's challenging, and it is upsetting on a very profound and almost subconscious level. I don't have children, but I recently acquired a niece ;) and some of the mother-son interactions really bothered me. The Babadook character was terrifying and, to me, even more terrifying for the mystery surrounding him. This film kept me up late tonight and spurred me to write my first-ever IMDb review. If you give it a chance, it may haunt you as it's already haunting me.