The ending is in no way confusing. It's very, very clear Granny and Norton die on the planet and hallucinate in their last minutes. Earth becomes true for them because they believe in it. The "memories" Norton has of the bike are not his real memories, they are the fuzzy, abstract feeling of home. That's why he feels connected to Granny, because they share the dream of returning and feeling "home".
Review of Impossible Planet
