KARL: Some folks has asked me, "If you had it to do over again, would you do it the same way?" Well, I reckon I would. Seein' how they seem fit to put in here, and here I been for a great long while. I've learned to read some. Took me four years to read the Bible. I reckon I understand a great deal of it. More than what I expected in some places. I slept in a good bed for a great long while. Now they seem fit to put me outta here. They say they're setting me free today. Hmm.
Karl has enjoyed his confinement and made the best of it. Freedom is scary to him: he has no idea what to expect in the wide, weird world outside. Would it have been different if he hadn't grown up in a shed?
KARL: Reckon I'm gonna have to get used to them looking at me too, hmm.
Another benefit to Karl being in the mental hospital is that he doesn't have to deal with people staring at him and treating him like he's different. In the hospital, everyone is weird in his or her own way, so the patients treat one another as if they were all normal. Or they stare out into space. Either way, they're not bothering Karl by staring at him.
KARL: I want to come back and stay in here. […] I reckon I don't care nothing about being a free man. I don't know how to go about it.
After a day in town, Karl tries to return to the mental hospital. Having the freedom to be in the real world induces anxiety in him.
BILL: You've been in lockup so long, you don't need me to keeping you locked up. You need to come and go as you please. Here. Take this key. It'll get you in and out of here at night.
Bill puts Karl in a little room, not because he doesn't trust him, but simply because that's the way the shop works. However, he soon feels guilty about it, giving him a key to get out. Karl actually leaves, showing us that he's getting comfortable in the real world. He doesn't want to isolate himself anymore.
CHARLES: What was it like out there in the world?
KARL: It was too big.
Having too many choices can cause anxiety: it's called the paradox of choice. Karl has led such a sheltered life that he has a difficult time adjusting to the nearly infinite number of possibilities in the real world. Kimmy Schmidt he's not.