Elements to Interpret:
A: Lily
B: Big Wide World
C: Castle Walls
D: the Woods
E: Creatures hiding in the dark
F: the things Lily has been dreaming of, the magic story
G: The Mountain high and valley low
H: Letting the creature in / creature controlling lily / hypnosis
I: Ice breaking breaks G (hypnosis)
J: Lilys flight and call for help

Literal
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Lily (A) is a Princess living in a castle (C) being protected by her parents from the harsh world (B). Nearby there is a magical forest (D) populated by ill meaning creatures (E). Lily sometimes sneaks out of the castle (C) having heard stories (F) of adventure and magic. One day she stays out too late and gets enchanted by a magical creature (E). Lily (probably unwillingly) accepts this enchantment (H) the creature promising her safety and adventures (G). Lily succumbs to the enchantment but when walking over a frozen body of water the ice breaks, breaking the spell (I). She now realizes that the creature lead her far away from home and in danger and no longer wants to go with, and tries to run away (J) but the creature catches up and tries to enchant her again. Whether she gets enchanted again is unclear.

Political
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Lily(A) is the American People. The big wide world (B) is the worlds complexity and abundance of ways to go wrong / to interpret the world. Castle walls (C) are the pre-internet era national consensus on what is right or wrong / how the world should be viewed e.g. that newspapers and big TV stations are generally reliable, the president and politicians want the best for the country, terrorists, communists fascists are bad, USA good ... The woods(D) are non-mainstream media / people telling stories different from what is generally accepted as true. Creatures hiding in the dark (E) are populists, conspiracy theorists, communists, whoever main stream /the public deemed as unsavory, not fit to be seen with. The magic stories (F) are what populists tell. Easy solutions to complex problems. Lily wandering out too long is modern society where the internet has undermined the old fabric of national consensus making former fringe opinions electable. The creature is Trump who promises what if you give him power (H) and let him do whatever he wants (G) his stories will come true: Coal comes back, the border wall will solve anything, ... Ice breaking (I) is the next election. People again have to decide whether to elect him (H). Everyone looks for another candidate but Trumps style has lead American society far away from its old safe walls having an unclear way to go.

Religious (Christian)
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Lily (A) is a fallible human. The big wide world (B) is the world of flesh tempting humans to sin. Castle walls (C) are commandments / religious rules for proper behavior intended to keep us on the right path and safe from damnation. Humans are tempted by sin and leave the right path, being tempted by their desires and sin (D). Creatures in the dark are demons forever tempting us, promising is worldly bliss (F) that can be achieved through sinning (doing drugs, getting rich through immoral means, ...)(G) . This human gives in to temptation (H) and becomes depraved. Deep inside he knows that he is on the wrong way and in a moment of clarity and remorse (I) he tries to get back on the right path (J) but once you lived a life of sin it is hard to get righteous again.

Historical
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Lily (A) is Europe between before 1914 and 1945. Before WW1, the Great powers had their system of alliances (C) supposedly protecting Europe from a big war (B). The woods and the creatures hiding in it (D&E) are nationalism, racism, imperialism, militarism, communism which unseen threaten the entire continent to be thrown into chaos and war. The stories (F) are the myth of the glorious battlefield, heroism in war, that a master race must prevail over lesser humans. The creature (E) are people telling the war can easily be won, industrialists speaking of national honor but hoping to profit from the war. (G&H) Letting the creatures take over is going into the war which supposedly is easy to win. Ice breaking (I) is the inter war period where the seed for the new war was already sowed. The creature newly trying to enchant is Hitler and the Nazis promising to return German honor and glory (F). Going to Mountain High and valley low (G) is the total war effort. In this interpretation Lily succumbs again to the creature after awakening.

Sexual
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Lily(A) is a girl growing up, becoming a woman an sexually active. The castle (C) is the youthful innocence which she starts losing once she comes into puberty. The big wide world is the big wide world of sexuality. The woods (D) represents the hiding / suppression of sexuality in our society making its exploration a hidden / shady thing. Creatures hiding in the dark are (E) her own desires for sexual experience, telling her to explore this area of herself. The story / dream (F) is her hopes / dreams of a fulfilled sex life. The magic represents the romanticization of the topic. Mountain High and valley low are the full spectrum of sexual experience / practice that she desires to experience. Letting the creature in(H), is giving in to her desire. The hypnosis(H) is the losing of her innocence. The ice breaking (I) is the realization that she has now become a woman. Her flight and call for help (J) is her fear of the future and the unfulfillable wish to become a child again. This interpretation is not to say that sexual development is bad. It just shows that it is a scary thing and often people wish back the time of innocence.

Psychological
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Lily (A) is your conscious mind, that castle(C) is your self deception telling you that you are in control of things. The big wide world is your subconscious which actually steers your behavior much more than your conscious mind. The woods (D) is part of that subconscious where your suppressed desires (=the creatures E) lie. The magic story (F) is you believing you are a rational being and you have no dark subconscious. The creature taking over control of Lily (H) is when subconscious desire actually takes over your actions. Ice breaking (I) is the realization that you are actually not in control. The flight is your futile effort to suppress your subconscious.