Labyrinth has been interpreted differently by various commentators, and this article will outline intepretations of the film that can be documented by third party sources.
Jim Henson's Views
The film's director Jim Henson viewed the entire film as a representation of Sarah's inner journey that culminates in her taking responsibility for her own life. Henson viewed the main events of the film as a dream of Sarah's, a view that is supported by the fact toys and figures resembling the creatures Sarah encounters in the Labyrinth are seen in her room at the start of the film.
Henson told Ecran Fantastique in a 1987 interview that Sarah "lives in her own little imaginary and fantasy-laden world. Dreams are very important to her. The Wizard of Oz means a lot to her. When she goes into the dream world, which makes up the whole film, she plays a role that recalls the way she feels about the real world. At the end, when she emerges from the dream, from the fantasy, she starts to renounce the foolishness of her childhood, and what the characters say is simply we’re here; we’re part of you, all of us as we are. You don’t have to give up your fantasies because you grow up; they’re part of you all your life."
Jay Dyer considered the film an esoteric narrative, focusing on its symbolism and references to the occult. Dyer considered Jareth's attraction to Sarah to be reminiscent of "the attraction of the fallen angels to mortal women" referred to in Chapter 5 of Genesis.