The film somehow conveys the idea that children can sometimes have the wildest and richest imaginations.  Which, to an extent is true.  It also implies the idea that when a rumor or some supposed to be incident spread out among people, how unverified it may be, could turn out to be real and believable.  In this case, where Sid tells of a man in the woods, there was no indication if any investigation was made by school authorities, other than the teacher narrating the story.  The teacher who was kicked out of the school due to the unrest and complaints of parents was somehow depicted as someone who eventually becomes deranged and prowls in the woods.  Impressive animation and worth checking out!