Major spoilers ahead for It Chapter Two. There's a sense of familiarity with the climactic battle of It Chapter Two. We've seen this before: the Losers running headfirst into danger to confront the monster that's been terrorizing them in a subterranean maze. But this time around, the battle is for keeps. The It Chapter Two ending raises the stakes for all the Losers — if they can't stop It this time around, they won't get another chance.
Pennywise (Bill Skarsgård) remains in the same place It has always been — lurking beneath an abandoned house in Derry. What the Losers learn is that It has been there far, far longer than any of them could have imagined. An ancient being who crash-landed on Earth, It terrorized the native Shokopiwah tribe (who are fictional) long before Derry even existed. It's through one of their artifacts that Mike believes he's figured out how to destroy It, using a ceremony called the Ritual of Chüd. For most of the film, the Losers are tasked with tracking down elements for the ritual that force them to confront their own lies and delusions, and face their painful pasts head on.
The actual battle is a literal extension of the same, with the group separated after tracking It below Derry, below the sewers, into the remains of an alien artifact that brought It to Earth. Where before they had to face their fears, now they have to muster belief — in themselves and each other — to whittle It's power down. It's limited by the rules of whichever physical form it takes, and the group's initial plan is to force the enormous Pennywise-spider to shrink down and chase them through a narrow opening. When It blocks them, Mike (Isaiah Mustafa) says, "There's more than one way to make someone small." It's the one skill the Losers have more experience with than anyone in Derry, but for the first time, instead of taking belittlement and abuse, they dish it out. Their mocking words shrink Pennywise down to a shriveled, useless lump, letting Mike scoop It's beating heart out for the Losers to crush between their fingers.
The movie's post-battle coda is a phone call from Mike to Bill (James McAvoy) asking if he received Stanley's (Andy Bean) letter. At one point during their phone conversation, Bill asks Mike why they all held on to their memories of Derry and their past this time. Mike suggests it's because It is dead, but also suggests that, maybe this time around, the Losers had more they wanted to remember.
As is the case several times through the film, Stanley's words speak for all the Losers. As he explains why he chose to take his life for the good of the group, we see Bill's written an upbeat ending (awfully similar to Stephen King's Stand By Me), with Beverly (Jessica Chastain) and Ben (Jay Ryan) finally in a happy relationship, Mike packing up to finally leave Derry, and Ritchie (Bill Hader) finishing initials he'd begun carving into the bridge decades earlier: R + E, finally admitting to himself who he loved. But destroying It doesn't just let the Losers allow themselves romantic love — the call ends with Bill telling Mike he loves him, and vice versa.
Freed not so much from It as they are of their own pasts, the Losers' biggest fear, that they were too flawed to ever truly be loved, is finally put to rest.