Malena explained

Malena is a metaphor for Eroticism/Love/Life drive of our psyche, as defined by psychology. She is a beautiful, attractive woman, elegant and in good taste and behavior.
*note that the town has a whore house, where we can see at least one very beautiful whore - Lupeta (Lupa is Latin slang for whore).

Malena's husband is a metaphor for Aggression/War/Death drive of our psyche. He is a soldier, sent to fight in Africa of WW 2.

The town is a metaphor for our psyche (all sorts of aspects of our mind, depending on these two fundamental drives - love and aggression). We all have to fit within a hierarchy, have our place in the world and society, acquire professional and social skills, we experience friendship, competition, lust, envy, revenge, joy, triumph, etc.

Renato Amoroso (the boy) is the force that reunites Eros(Malena) and Thanatos(Malena's husband) and restores balance to the Psyche (the town).


Now:
Renato wakes up, rises, from a state of Unconsciousness, to a state of Consciousness. From Instinct, to Reason.
In the beginning of the movie, Renato is dominated by lust - physical desire for Malena's, not concerned with anything else. He is irresistibly attracted to Malena, and straight out stalks her. He spies her in the intimacy of her home, follows her around town, steals her underwear and masturbates to her image. He is dominated by sexual fantasies of her. He wants to possess her completely. He is like a dog in heat. Renato is for now, living in an animal, primeval state.
Poco a poco, Renato grows to understand Malena and her relation with the rest of the town. He begins to understand her situation, her dilemma, he comes to know her as more than an object of sexual desire.

Soon the news arrive that Malena's husband is dead. It is the Aggression Drive getting out of control. The psyche is spiraling down in turmoil. As long as Malena's husband was alive, her status within the village was relatively stable. She went about her daily routine of a normal life, buying food, visiting her father, decently dressed, saluting people and being saluted, with relative respect. As soon as the town finds out that Malena's husband is dead, the balance is broken. Her status has changed, and we are witnessing the struggle to achieve a new balance.

Every man wanted Malena before, and now they're acting towards getting her. The lawyer wants to marry her, after the dentist fought an officer over her. The other women in the village try to destroy Malena, forbidding their husbands to hire her, selling her bad food, etc. The village spirals down into depravity and lawlessness.
Everybody is now obsessed with Malena, and the town is controled by the Nazis. The once distant war had now come to town, and Malena's father dies in a bombardment.
As Malena starts whoring with the Nazis, in strident colors, we see Renato's mind shattering into a kaleidoscope of soldiers having intercourse with whores, then he faints.
The town is torn between two extremes states of eroticism and aggression.

Renato's father takes Renato to the bordello, to deliver him from his "illness".
As soon as Renato consumes the physical act of love with Lupeta, the Americans enter the town, liberating it from the Nazis. The libido is now at peace, liberated from the frustration of abstinence, or should I say, the lack of feminine energy, it has found a way to unwind.
*note that Renato's masturbating sessions did not free him from sexual frustration. The feminine energy was a fantasy, not reality. Only when Renato had sex with a real woman, did the sexual tension dissipate (if you ask me, sex with a whore is just as invalid as masturbation, as the man-woman dynamic is validated only through attraction-seduction)
But what begins as a celebration of Renato's sexual rite of passage - the parading of the American army through town, quickly turns into a chilling realization of the new state of things: Malena is removed from the town hall, pulled by the hair by the town women, she's beaten, her body bruised and bloody, her hair is cut off, she is administered a vengeful correction.
The pure, uncontrolled erotic drive that was Malena, and its unholy alliance with the pure, uncontrolled aggressive drive that were the Nazis, and their rule over the psyche from the seat of power that was the town hall, are ended, the Nazis had vanished, Malena leaves town by train, next day, her whole body covered in black clothes.

In the end of the movie, Renato is helping the returned husband to find his Malena. The town had put Malena under a damnatio memoriae, and is ignoring her husband, excluding him, his house having been occupied by refugees as the town was recovering in the aftermath of the war.
Malena's husband leaves town, after he receives Renato's letter, telling him where Malena had gone.

1 year later, the town had recovered from all the turmoil, and everybody retakes their place within society. Renato has a girl his age by his side, he's well groomed and dressed, the whole family doing a promenade on the town's main street, people had resumed living their live as they were before the war, in a relative balance.

Malena and her husband come back in town, side by side, in clothes of sober colors, his right arm missing, her face wrinkled, but this time they are accepted by the town. Renato's father salutes the husband, and later, the same women who had beaten Malena as the town got liberated, are now saluting her, and offering her the best merchandise they have, noting how she's now older, but still beautiful.
The missing right arm of Malena's husband and the end of the war is the Aggressive Drive brought under control of the psyche, diminished, restrained, in check.
The somber clothes and cumbersome shoes worn by Malena and her wrinkled face is the Erotic Drive brought under control of the psyche, restrained, curbed.

Renato's final monologue explains what happened: he is running away from longing, from innocence - the unbridled state of the mind.