Squall and the others succesfully defeat Ultimecia, undoing her tampering of the timestream (note that when using Scan upon her final form, we learn that she was absorbing all time and space into herself). Everyone then begins focusing on one another and their friendship in order to return to their present, just as they had done when traveling to the future.
Squall, however, being the one among them who had the biggest deficiency in depending on others loses his focus and finds himself at Edea's Orphange when he was four years old. He speaks to Edea briefly before Ultimecia arrives on the brink of death. She passes on her powers to Edea before dying and Squall then mentions to Edea that she founded Garden and SeeD. Because of this, in actuality, everything in the story was pre-destined, having already happened before. Squall's presence in the past essentially caused a self-perpetuating timeloop.
After speaking with Edea, Squall then returns to the present as the timestream is rebuilding itself, seeing things that have happened and something that would have happened had he not been there to save Rinoa in space: Her helmet shattering and her dying as a result. Squall is then overcome by the pain of that possibility having occurred and collapses.
Rinoa finds Squall laying on his back and with the look of death on him, then hugs him to her as she begins to cry, the timestream then being fully realigned with it being revealed as the world is restored that Squall had made it to where he had promised to meet Rinoa after all: The flower field beside of Edea's Orphanage. He is then returned from the brink of death, everyone is happy, and presumably everyone lived happily ever after. That's pretty much it.
