Fairies of War
A lot of conversation about this film centers on the fact that it contains two worlds. There's the "real world," which is harsh and cold. It's the world of Vidal and brutal authoritarianism…and it makes us want to hide under our duvets and watch Disney movies and eat Ben and Jerry's.
In contrast, Ofelia enters the world of the Underground Realm, which is softer and more organic. It is a world of life, directly contrasting to Vidal's world of death.
But there's a third world in Pan's Labyrinth: the world of the woods and of the rebels. This world parallels the realm of fairies and directly clashes with its natural opposite, the authoritarian world of the soldiers.
The rebels are the losers of the Spanish Civil War, which was won by the Nazi-backed Falangists. So not only are they rebelling against the establishment, but they're ideologically the group more opposed to authoritarian governmental authority. Good job, rebels.
Also: they live among the trees. Their living quarters and guerilla tactics are in stark contrast to the uniformed and orderly soldiers. The rebels may be a bit dirty—but this is a film where the closer you are to the earth, the more kind and moral you are.
In one scene, Ferreiro tells Pedro that he and his men should stop fighting and escape over the border. He thinks their cause is lost because, even if they defeat Vidal, he'll simply be replaced by another authoritarian figure. But Pedro insists that he has to fight:
PEDRO: I'm staying here doctor. There's no choice.
To Pedro, this fight isn't necessarily about winning or losing (although winning sure would be nice). It's about taking a stance and fighting for what you believe in.
And this statement about choice underlines the fact that the rebels are incredibly different from Vidal, a man who states:
VIDAL: […] I choose to be here because I want my son to be born in a new, clean Spain. Because these people have the idea that we're all alike, but there's a difference. The war is over and we won. And if we need to kill each one of those motherf***ers to agree on it, then we'll kill them all. And that's that. We're all here by choice. [He raises his glass.]
While Vidal's portrayed as a ruthless man who has chosen his position and his actions, the rebels are portrayed as having been swept up in the tides of war. They're fighting because there's nothing to do but fight.