They did the best with what they were given. Trying to force a plot into a game that fundamentally doesn't have a plot is always going to lead to some quirks.

But if you fundamentally don't understand the plot itself, the idea is that the paradox is a metaphorical representation of a person's inner turmoil. The paradox traps people who are facing cognitive dissonance over their responsibilities (metaphor: endless loops = inability to decide). In order to exit, you have to face those responsibilities and accept them (metaphor: going through all 8 levels = undertaking responsibility). If you fail to do so (ie give up), then you get absorbed into the paradox to become the next NPC. The paradox tempts you with a false exit when you're at your lowest (metaphor: false exit = convincing yourself to live in false reality and rationalizing escaping your responsibility). If you accept the false reality, you're never leaving.

Main character is a loser who wanted to be an absentee father to his child. Over the course of the movie, he learns to protect the child that he found, and in turn, the child prevents him from accepting the false exit. He successfully exits, and as he now accepts his responsibility as a father, decides to help take care of his child. Minor dramatic irony is that the child that he found in the paradox ends up being his own child from the future.