I know there are couple of threads about the ending already, but I didn't find any answers in them. I jsut finished the game and I bought it at launch, so as you can see I didn't have much time to play it, so maybe I lost some of the story in the process by playing it over long time.
 
In the last mission I didn't understand these:
1. Who were all those people I was fighting there? I entered the water tunels expecting confrontation/chase with the flamethrower guy, not whole army of enemies. Who were those people? Why were they shooting at me and also at the flamethrower guy?
2. Where did the water come from? Is it supposed to be just a coinsidence that kills Phelps right when the writers needed it?
Also one thing that bothers me the most, isn't from the last case only:
3. Why did Phelps cheat his wife and go for the german chick? Up to the point where he goes visit her for the first time, Phelps is totally presented as a guy who would never do anything wrong like that... I mean, I totally expected that to be some kind of trick how to expose the corrupt police or something, I really didn't believe it was for real untill the very end. It just came out of nowhere... now it just seems as the writers rushed this part of the game, giving player too little story elements where it was needed. 
 
 I understand the need for "dark ending", not really blowing up the whole conspiracy and all, but there was -at least for me- no satisfaction from the ending at all... just confusion. And I have to say I love bad endings the most, in movies and games, but this was just... empty.

1. The people you were fighting where the corrupt LAPD.

2. I don't know.

3. The first impression of Cole is that he is a good guy who will never do anything wrong. But as the story goes on you begin to realize that he has a "darker" side to him. All the flashbacks of him during the war point to the fact that Cole is far from perfect. I agree that the whole thing was a bit abrupt and that there should be more to it than that.

Moral of the story was, Cole was a douchebag in the military, he got shot by Sheldon so he would quit endangering the platoon and killing children and shit.  They still gave Cole the hero's welcome back home and a silver medal for being a coward.   So yeah at the end there...  Cole realizes that alot of this is his fault and takes one for the team as kind of redemption i guess. 

2) It was raining heavily during the chase, and all that water has to go somewhere. So yes, the writers did that to make it more dramatic.

Also, for the last couple hours you've been dealing with arson cases, with many dead, burnt bodies. The final suspect was a flamethrower handler. The big secret from the characters time in WWII is when they burned a civilian hospital. Veterans were having their American Dream literally go up in flames. In the last level of the game you're surrounded and ultimately killed by the thing that's supposed to save us from fire: water.

They played the Cole and Elsa affair very subtly out of homage to the Noir films that inspired the game. In the 40s sex and/or infidelity in movies was implied, or at best occurred during obvious camera pans and music swells to a shot of an open window with curtains billowing in the wind. The moment where Elsa wordlessly lets Cole into her apartment is when you're supposed to realize that he's been going back to that club for a less than noble reason. Up until then, it's supposed to be vague to allow you to read into it and question Cole's supposed moral superiority.

Regarding the water, I remember there being a part in the last level where you get to a large room with catwalks and the water starts rising significantly. I can't remember if it was explained or not, but I think either the corrupt cops or the flamethrower dude damaged something? Or opened some valves, or something?

There's been lots of threads on this. People seem to not get the attraction between Cole and Elsa while there's implications and subtext all over the place. When you replay the game, pay close attention to every little quip out of the characters, even the car banter. Everything is foreshadowed or implied at some point in the story. It's thematically sound, the threads left dangling are all intentional ("Forget it Jake, it's Chinatown") and the point of the plot is made very poignantly. Cole Phelps' flaws are what make his character, and make the plot. His beliefs and hypocrisy are contrasted by Kelso's. Really I could go on and on about the plot of this game and why it's brilliant.

I think the controversy the switch to Jack and the grim ending started is just a result of a difference in perspective; Rockstar doing the multiple protagonist thing doesn't really resonate with peeps that still expect a rich plot and a power fantasy to go hand in hand. But a beaming happy hero Detective with a shiny medal and a totally cleaned up city would be the farthest away from Noire you could get. It's LA Confidential, not DIe Hard. The thing people don't seem to realize is that it takes Cole's and Jack's perspectives combined to see all the pieces of the conspiracy puzzle. You just have to get over the idea that you are Cole or even Jack; you are interacting with the world through them but they are still defined characters with set motivations; this isn't Skyrim where you're a blank slate or Mass Effect where you further define the protagonist through choice, all your success or failure is doing is defining the amount of desperation (or glory) in their struggles to uncover corruption. You are in fact as an observer, the only omniscient person, piecing together the facts (and the thematic intent!) of the plot. Cultural detectives if you will. Just like in every good Noire book or film. Why do you think they show you snippets of the murders and the crimes taking place? This is classic Noire, dropping knowledge on the viewer so they can piece everything together just a little ahead of the protagonist(s), making those aha! moments extra satisfactory.

The only point I generally agree on with the haters, is that the edit/pacing of the cutscene where Cole dies feels a little rushed, but I suppose this must be intentional to drive the point of futility home. Otherwise I'll defend this game's cinematic achievements to no end.

TL;DR: Subtext. Grasp it. Video games. Not just for He-Man-esque tales. Noire. Intricate.

@DiscoGobbo said:

Also, for the last couple hours you've been dealing with arson cases, with many dead, burnt bodies. The final suspect was a flamethrower handler. The big secret from the characters time in WWII is when they burned a civilian hospital. Veterans were having their American Dream literally go up in flames. In the last level of the game you're surrounded and ultimately killed by the thing that's supposed to save us from fire: water.

This is a genius observation sir! That's like the one meta-allegory tying the whole theme of the plot together. Genius! Also, archetypal thematics for the win.

@BBQBram: My pleasure!

This is one of the few games where I sat there and thought about it after completion, instead of the typical: "Well that was fun." One can only hope in the future we'll get games with narrative (and not just story) more often than a few times a year.

@BBQBram: Fantastically well said, sir. Agree with pretty much everything there.

Only disagree on the thoughts about the pace of Cole's death. I thought it was perfect. Cole wasn't the hero of this story - not even close. In true noir fashion, there barely was a hero, and in the end it was the guy who you hated most of the way through.

It was always pretty clear that Cole was a study in shades of grey, and in pushing against our typical idea of not only video game heroes, but modern heroes as a whole. We were supposed to THINK we were to identify with him by simple virtue of the fact that we made him walk and shoot his gun. But we weren't. It was clear he had his own mind, was living his own story. Never getting along with anyone, always distant, concerned more with the rules and in asserting his (arbitrary, through unearned titles) authority (making decisions that seem important, not even necessarily in a career-minded sense, a la Roy (Fucking) Earle).

And in that, he only did what he could to redeem himself, and to die valiantly, and as in most things Cole did, he only barely succeeded. Seeing him cut off so inelegantly ["I--"] by a wave of water when trying to say his last words was absolutely perfect.

I thought the ideas of following this guy, who only climbed the ladder because he was good at stepping on the guy behind him, and to see the consequences of not only his actions, but the system that allowed his actions to carry so much weight, was something I'd never see done this well by a video game.

People who expected that sort of 'blank canvas' experience that you bring up from things like Elder Scrolls or (to a lesser extent) Mass Effect, et al, needed to adjust their expectations, not crap on the game for not letting them tell their 'own' story, which could never, ever be as strong as the one they got.

I am literally still in awe of all this, and the more I talk about it and think about it, the more amazing it seems.

Alright man! That actually makes a valid point. It seemed weird to me that in a game with stellar direction all-around, the climax would be "rushed". Now I see the whole point, especially with Cole's inability to even wrap up his own redemption with some sappy goodbye. It did underline his futility. Combined with the allegorical power of the water of time washing it all away just when the fire of injustice has been burning at it's fullest (the incident in Okinawa, the burned dreams of the GI's, basically the burning of the American dream). Think about the final "antagonist" they put down, how allegorical he is for the whole of America at that point, both guilty and innocent, manipulated and warped by the greedy higher forces. But the fire isn't fully put out, and the trace of the "hero" is simply washed away. "The more things change, the more they stay the same".

At first I thought the Chief of Police must have ordered the flooding of the tunnels, but it was the rain and it was a force majeure moment, which is fine in literature if it makes for such a crescendo of thematic resolve.

But hey, it's "just a game" right?

I didn't "get" the ending, but the fact that I am trying to learn more from other people who enjoeyd it speaks of the quality of the game. 
 
I will surely play it again, thanks everyone for the explanations and their point of view.

@BBQBram: Dunno man, about the whole fire/water thing, my thoughts are far less nuanced than my thoughts on the evolution of Cole as a pretty purposely facile protagonist.

Nutshell: wall of water = yo, it was raining + storm sewer.

@BertieWooster: Well the way I see it, it just seems too random to not be making a point - especially seeing as it mirrors the thematic use of fire in the game so well.