Solving the Time Issue:> Ashi realized she couldn't exist in the past, fades away>Jack will eventually forget everything when he realized he shouldn't remember anything
The latter is emphasized heavily with the "foggy woodlands" and "letting go of the lady bug."
The foggy woods is a visual trope that represents loss and confusion. Mixed memories. Etc.
The Lady Bug represents his memories of Ashi, leaving him. He is relieved to be at peace and forget, hence the smile.
Once her memories leave him, the Lady Bug, the world brightens up and the fog is gone.>Jack remembers nothing now as causality seals the loop