It's my favourite Yokai Watch movie and by far the darkest. I've seen people call it lighter than the 4th (the Shadowside one with GeGeGe no Kitarou), but I disagree. That one's darkness never gets as personal. It has a character with confidence/esteem issues, but he becomes the villain, so our sympathy is limited. This one, though...
1. Starts with a child (Shin) with a dead father and a sickly mother. I'd guess he's about ten years old. He's the only person supporting her, since this is an era without financial support or social services for this kind of situation. 1950s was my guess, but apparently it's the 1960s. Shin's happy and positive, though... until something supernatural and gruesome happens, right in front of us. Next thing we know, the now-orphaned Shin's about to commit suicide.
That's seriously heavy for a Yokai Watch movie. Another boy called Itsuki tells Shin, "Even if you die too, you still won't meet your mother." However...
2. Itsuki thinks the culprit is "the yokai who killed your mother and my sister."
It's not all like that, thank goodness. The tone softens. It's quite a fun children's film, even sometimes making me laugh. The boys befriend a girl (Tae) who can see ghosts and a lovable, pathetic ghost called Suu-san who's only waist-high even for 10-year-olds but is apparently a Samurai Guardian. We'll see fart jokes and comedy "job interviews" in which Tae thinks monsters are cute.
A cute sequence underlines that, yes, this is the past. Shin and Tae excitedly explore Itsuki's house. Look, a TV! And it's even in colour! However, the film never forgets about its hard edge. Itsuki needs to be talked down from exterminating a yokai. He's shocked to learn that using a yokai's power with the Yokai Watch doesn't mean enslaving it, but instead making friends.
"I think she isn't really that bad after all. Yokai must have reasons for what they do, just like us."
That Yokai Watch rejects Itsuki and only accepts Shin. Our heroes visit Yokai World and see a son trying to kill his father. There's a death revelation and more.
The conclusion has emotional weight. There's more than one reunion, with the big final one being... wow. I was poleaxed. Incidentally, that reflects the original Shin-Itsuki meeting, with another discussion on a bridge that could have ended with someone leaving this world. I think this one's a keeper. It's genuinely good (although this appears to be the last Yokai Watch film that hit it big, with the later ones being harder to find and not even having their own wikipedia pages). We have goofy entertainment and comedy, but also emotions with meaning. I've always been fond of Yokai Watch, but this is the first time it's impressed me.