He sees evil, inhumanity, and, with his laughter, finally participates in that society. Hawthorne's first American ancestor was notorious for persecuting Quakers, and the son of that ancestor was notorious for condemning witches at the Salem witch trials. Guilt and human frailty, then, as well as free will versus divine predestination, crop up as central issues here. At the end he has literally lost his wife, Faith, and his faith in his fellow man. He is an outcast.
People take on a changed vision.
But it is debatable whether that vision is a better vision, and whether it results in someone's good or doom. Hawthorne's tales appear to be dreams or are at least as psychologically complicated as dreams are. I think that's our clue to how to read his tales. When reading Hawthorne, do not puzzle too long over what any one of his stories might mean or search too long for answers, but enjoy them for their ambiguities and nuances, for the questions they raise and the avenues they open in our minds. This story is usually read as an allegory, an extended symbol or a description that stands for something else.