Warning: before reading any further, you should know that this article contains heavy Prey spoilers. If you haven't already finished the game, you really should go and do that first.
So Prey's ending, or rather, endings, have left many fans scratching their heads thinking "what the heck just happened?" While it did consist of a rather cool twist, a lot of questions remained unanswered, and a lot of new ones are raised. We won't fully know exactly what the ending meant until the inevitable sequel, but for now, we can analyse the endings and come to some conclusions.
Prey technically has three "main" endings with a handful of variants, and two "true" post-credits endings that vary (ever so slightly) depending on the choices you made in the game. We will look at each ending one-by-one, try to explain them, and then finish up with an overall explanation at the end to try and tie up all the loose ends.
The December Ending: Escape in Alex's Escape Pod
This ending is presented to you fairly early on in the game, and can actually be completed as soon as you get access to the arboretum and crew quarters. If you follow this ending, a rogue operator named December claims that January, the operator with your voice who has been your guide for the game, is lying to you. December offers you an alternate to going through with January's plan to destroy Talos I - just high-tail it out of there in Alex Yu's secret escape pod.
If you go through with this ending, however, all that happens is your screen turns black, and you hear Alex lamenting you for "giving up". He then tells someone that "This isn't the one, start over," and you are prompted to reload an earlier save.
The Explanation: This is a false ending. In order to understand this ending you have to finish one of the other main endings that reveals that you are in fact a Typhon experiencing Morgan Yu's memories. In this ending you opted to escape rather than finish the simulation, which is why Alex simply "restarts" the simulation by having you load an earlier save.
The Alex Yu Ending: Destroy All Typhon
Towards the end of the game Alex Yu reveals an alternative plan to January's "destroy Talos I and everyone on it" solution. By scanning the Typhon coral, you're able to develop a kind of omega Nullwave transmitter that will kill all of the Typhon while keeping the station intact. The only "person" you will have to kill is January, who refuses to let you deploy the Nullwave transmitter unless you destroy him. This is usually considered the good ending, because by following this ending you automatically save everyone left on the ship, destroy the Typhon, and preserve all of the scientific advancements of Talos I.
Completing this ending will lead you into one of the two "true" ending scenarios after the credits role.
The Explanation: Read on to the "true" endings to understand what this ending means.
The January Ending: Destroy Talos I
January's plan throughout the whole game, which he insist is your plan, is to simply get a hold of Morgan and Alex's arming keys and force Talos I's nuclear reactor to detonate, destroying the entire station and everything on it. If you choose to follow this ending, there are actually quite a few variants you can follow.
No matter what happens, Alex dies, as he opts to go down with the ship. You can also opt to go down with the ship, and bring all of the other Talos I survivors with you. Or, you can save and reprogram Dahl so that he can pilot the shuttle containing you and the other survivors to safety. Or, you can simply get the heck out of dodge and take Alex's escape pod, leaving the rest of the survivors to perish in the explosion. Note that choosing to escape means you'll also have to destroy January, as he wants everyone to go down with the ship.
Completing this ending will lead you into one of the two "true" ending scenarios after the credits role.
The Explanation: Read on to the "true" endings to understand what this ending means.
True Ending 1: Failure
After the credits role is when the weird shit starts to happen. If you did the Alex Yu or January endings (any variant), you'll be presented with a post credits scene in which Alex and four operators representing the major human characters on Talos I are gathered around you. You are strapped to a chair, and going by your wavy black tentacle arms, are a Typhon Phantom. Alex and the operators then run down a summary of all the big decisions you made throughout the game.
In this ending, Alex laments that the experiment was a failure, and you refused to show enough compassion. This is usually achieved by killing, or causing to be killed, the other human survivors on Talos I. You are then terminated, and the game ends.
The Explanation: Surprise! You're not actually Morgan Yu. You are a Typhon, and the entirety of the game has simply been a simulation of the real Morgan Yu's memories of the Typhon incident. The goal of the experiment was to try and instil human empathy and emotion into a Typhon, in order for both of the races to understand each other better, and you failed by being a psychopath. Sorry!
True Ending 2: Success
This is what I believe to be the canon, "best" ending of the game. This ending is the same as True Ending 1, but instead of being terminated by Alex, he and the operators offer you praise. To get this ending, you generally have to be the good guy throughout the whole game, by saving and helping the survivors on board Talos I.
Alex then shows you the real world. It's San Francisco, completely covered in Typhon coral. If you were paying attention, the game alluded to this with the visions it showed you when installing certain neuromods, or scanning certain Typhon. In the real world, the Typhon made it back to Earth, and are hard at work taking it over.
He then gives you a choice. He believes that the experiment was a success, and he has succeeded in putting some humanity into you, a Typhon. If you think he's right, you can take his hand and offer to help. When you do this, you see your hand morph into a human one, showing the first step towards friendly Typhon/human relations. Or you can just choose to kill everyone. You monster.
The Final Explanation:
Alex then at some point, presumably on earth but possibly on another space station given he's still wearing his Transtar uniform, captures a Typhon phantom (perhaps even the Typhon phantom that rose from Morgan's corpse) and submits it to his experiment, alongside a group of operators instilled with the voices and memories of Talos I's former crew.
Alex believes the only way to save the world is for Typhon and human to coexist, and you are a result of that belief. He says that they spent so long putting "them" into "us", they never thought to put "us" into "them". Showing compassion, getting the True Ending 2, and choosing to side with the humans, is the "good ending," as it alludes to a future where things are patched up and everything goes back to normal (ish).
However, not every video game takes the "good" ending to be the "canon" one, as games like X-COM 2 memorably showed us.
Despite all of this, some questions still remain unanswered.
Who was December? As Alex says the whole thing is based on Morgan's actual memories of the situation, we can assume that December was real. So was December telling Morgan the truth, or was January?
What did the real Morgan try to do? Did he try to follow January's plan or Alex's? Or did he follow December's plan and book it out of there? Perhaps he's even still alive, or maybe he is the reason the Typhon made it back to earth?
How did the Typhon get back to earth? They were isolated on Talos I, and it looks like Alex was the only one who made it off. So either they hitched a ride with Alex, or brought the whole station with them. I find it hard to believe that earth wouldn't just nuke Talos I from orbit if it started flying towards it.
These questions may not be answered until Prey 2, but it's certainly fun to speculate!