Listen, this is what I've been able to piece-together...

The badger-thing, it was once a human. The mansion we were just at... the badger-thing burned it down while he was still alive. People died. --He was then caught and institutionalized. That's why we're in hospital smocks and locked in a room that looks like a padded cell.

The 'mansion' we were at doesn't really exist anymore, it's what the badger remembers of the house he burned down. We were just made to think it exists. Whatever this badger-thing is, it has some power to... mentally influence us.

Kahk-kahk... I know it sounds crazy, but it's the only explanation that makes sense, so far.