Mr. Jones is the protecter against a nightmare realm that crosses over with reality. He sends people creepy scarecrow things to protect against the nightmare monsters. Scott and Penny move out to the country to make a documentary, then discover Mr. Jones' house/scarecrows (which have just been treated as weird art from some nameless guy so Mr. Jones isn't even his real name) decide they'll make a documentary about his "art" and then discover that he's the protector against the nightmare realm and Scott inherits the duty when Mr. Jones is taken by the monsters while he is protecting Scott and Penny.
A Little Longer:
Scott (Jon Foster), a documentary filmmaker, and his girlfriend Penny (Sarah Jones), a photographer, move out to the middle of nowhere so Scott can work on a nature documentary. Scott hasn't planned it out very well and admits he's stopped taking his pills. To begin, they argue about Scott getting work done, why Penny dropped everything to come out here, and weird things like a birds flinging themselves at the windows start to happen.
There's a shadowy figure that steals Scott's bag and when he follows the guy back to his house and breaks in to retrieve the bag Penny and he find a bunch of scary-looking scarecrow things. Scott goes down into a weird basement area and finds a bunch of them down there. Mr. Jones comes home and they hide in the house, Penny throws something to distract him, and they run out and run home. When they get back to the house, Penny says that they've discovered the "elusive artist" Mr. Jones and shows Scott a book of his works.
Scott and Penny decide to change over to a documentary about Mr. Jones with Penny photographing the various scarecrows around the area -- as, apparently, this guy sent these things to various people across the country out of nowhere and the scarecrow things became all the rage in the art world. Scott goes to New York and interviews a bunch of art-related people who talk about the meaning of the art and one guy who received, and then destroyed, the one sent to him. The guy says they shouldn't be looking for Mr. Jones and that, since he got the weird scarecrow thing his life has been a nightmare.
Penny, meanwhile, is taking lots pictures of the scarecrows, runs into Mr. Jones. She talks to him but he doesn't speak to her and then she's at home but can't recall exactly how she got home. When Scott gets back they look at some of the scarecrows she's photographed but find they've been burnt. Penny tells Scott that she felt a peace with Mr. Jones like waking up from a dream.
Scott then goes back to Mr. Jones' house to explore the basement further, saying that he has to and feels drawn there. Penny keeps watch outside and they communicate with walkie-talkies. Scott looks around and finds a sub-basement where there are burning torches and a thing in the center bundled up with candles on it's eyes (I think it's a mask.) Although they continue to talk to each other, neither can hear through the walkie-talkies, so when Mr. Jones shows up and Penny is trying to get Scott to come out he can't hear her. Mr. Jones approaches Penny and at the same time Scott is not alone in the sub-basement and turns off his light after calling for Penny (and hearing her answer back even though she's outside) and ducks down, scared.
Scott gets out and runs home to find Penny already there. Penny says Mr. Jones saved her. Scott is freaking out and doesn't trust Mr. Jones the way Penny does. There are scarecrows all over the house and Scott rips some of them down. They huddle together scared, try to leave but can't get the car to start even though they can't find anything real wrong with it, decide they're going to hike the 10-miles back to civilization at sunrise (at 6:30am) in the morning, and cuddle together to wait. They have sex and then sleep for a while. Scott wakes up Penny about 10 minutes before sunrise to get ready to leave, but sunrise never happens. They huddle inside and Scott explains it as a storm -- but by 9:30am it's still pitch black outside.
They start seeing figures outside who bang on the doors. There's thunder and lightning. Mr. Jones tries to come up there stairs and help them; Penny tells Scott to open the door and he grabs Mr. Jones' hand but Mr. Jones gets pulled away. Penny says that he was protecting them from the Nightmare world but now that he's gone he can't. There's a Penny who isn't Penny in a white dress beckoning Scott and several Scott-like figures in hoods. Penny and Scott decide that he has to return what we took from the shrine but are bombarded by the figures as they try to make their way back to Mr. Jones' house.
As this is happening, Scott talks about having a dream where he's watching himself and playing on the unplugged computer is video of Mr. Jones/(Scott?) taking video of Penny and Scott in their time there, arguing with each other, sleeping, etc., one video of him huddled in the sub-basement mixed in with one of the experts talking about how Mr. Jones may think of himself as a shaman because there are many cultures that believe that dreams aren't just something we do at night but that there's a real line between dream and reality that needs to be patrolled and protected.
Scott goes to Mr. Jones house and goes into the sub-basement after being chased -- the figures flashlights are bluish and Scott's is yellowish -- and in the sub-basement he relights the candles on it and puts the mask on. Then he picks up a lantern and he helps Penny get out from the basement where she's been surrounded by a bunch of scary Penny-copies. When they go outside it's daylight. Scott takes the mask off and kisses Penny. As they leave the basement there's voiceover of the expert talking about the dream world being real to these people and Penny saying that since Mr. Jones is gone, Scott must stay.