That would explain the crackling noises in the basement and why the end game collapse happenes.
Everything you see is the entity, excluding killers and survivors.
The entity is the realm (afaik).
We're all in the Entity's realm. The basement is special because it seems to be a place of ritual. The Monstrous Shrine perk describes the Entity as having taken interest in loving care of the basement hooks, for example. There's always skulls and candles around it.
Endgame collapse actually contradicts the original lore that the Entity was incapable of direct action, hence its need for killers to hook people in order to gain sustenance from them, so I'm not sure what the official explanation for that one is.
The Entity is gradually growing stronger over time, which is why it is starting to be able to control more and more powerful killers, and also why it is capable of killing survivors in Endgame Collapse.
The trial is a flower, it starts at the basement and blooms upwards. The basement is the closest thing to the Entity in the trial which is why you hear crackling and see orange lighting.
It's arguable that this rule is of the entity's own making, and the endgame collapse is it's growing thirsty for a kill or some sort of climax to the point where it breaks this rule. It's also arguable that it's because the realm is deteriorating, allowing the Entity to break through.
It's arguable, sure.
My original statement was simply intended to reflect my lack of certainty on what the official explanation for it would be.
I believe that before the Entity couldn't directly affect survivors much because she wasn't as powerful as she is now. The Endgame Collapse is a worrying sign that the Entity is getting much more powerful, able to physically kill survivors instantly now due to having increased power.
To sum up, before the Entity couldn't do anything much herself due to having less power, now she can since she has more to feed off of. That's how I see it in a lore friendly way. anyways.
Technically the Entity is the realm
But I remember the devs saying that the Entity, so I guess the main body since she is a biological creature, is located under the realms
So yeah, the entity lives under the realms like the devil
the entity doesn't constantly physically manifest itself, i don't think, therefore it isn't really in a specific place at a specific time. if we have anything to go off of, though, the basement is confirmed to be where the trial's manifestation begins, and the entity lifts the survivors' souls into the sky when they've been sacrificed.