>>212187652 (OP)It's both.
Whenever you ask an "either or" question about a David Lynch movie, the answer is always BOTH.
Example:
Was all of Twin Peaks just a dream or was it about multiple time lines? Both
Was Laura Palmer raped by her dad or was it BOB possessing her dad and making him do those things? Both
Was Inland Empire his greatest kino or was it a mostly improvised nonsensical pile of shit shot on an iPhone? Both
etc