Character Analysis
On its face, "Death in the Woods" is a simple story about the life and death of Mrs. Grimes. But look a little deeper and you'll realize that the real star of the show is the narrator. By subtly hinting at the ways that he's taken "creative liberties" with Mrs. Grimes' story, the narrator ends up making some great points about the way that memory works—and revealing some truths about himself in the process.
Captain Unreliable
Let's get it out of the way: this guy is an unreliable narrator. It takes a little while for this to become clear, but we get a hint when the narrator mentions how the details of his story must be "stuck in [his] mind from small-town tales" of his youth (1.13). In fact, he even wonders how exactly he remembers what happened. Well, dude, why are you asking us? Aren't you the narrator, after all?
We don't see the extent of his fabrications until the end of the story. That's when we learn that the narrator (later in his life) once worked on a farm owned by a German man who would harass his female servant. We also learn that he was once surrounded by a "pack of wolves [...] waiting for him to die as they had waited for the old woman" (3.15).
Up until this point, we think that both of these events happened to Mrs. Grimes, but that doesn't even make sense when you think about it—how could the narrator know any of this stuff anyway? More importantly, it makes us wonder why he feels the need to blend his own life experience with those of Mrs. Grimes.
True Lies
The image of Mrs. Grimes lying dead in the woods is so powerful that the narrator feels compelled to try to make sense of it. As stated, these women are dime-a-dozen in small towns like his, but "no one knows much about them" (1.1). So is it wrong for him to take his own experiences to try to imagine what her life was like? While the result might not be true in the traditional sense, it's true in the sense that countless women have experienced similar things.
But you also have to remember that this is the narrator's first experience with death. That "strange, mystical feeling" that he feels running through his body is the realization that people die (4.14). It's no coincidence that he also happens to be going through a bout of "inflammatory rheumatism" (arthritis) at the time—that only makes issues of life and death more pressing (1.4). In this way, the narrator is doing the one thing that no other character was willing to do—to look at the world from Mrs. Grimes' perspective.
Mrs. Grimes was never allowed to develop an individual identity during her life, so it's impossible to ascribe one to her after her death. But the narrator uses her to make broader points about the way that women are treated by society, the motives behind the men who oppress them, and even the nature of death itself. So who cares if it didn't really happen—that doesn't make it any less true.