OK this is what i've figured out. The whole thing, from episode 1 all the way up til now , is all connected.

You know when Kanna was "brought to the other side" ? that's how an Illegal is made. The Illegal is the cyber-consciousness of the person trapped in the Space.

Yasako's grandfather is believed to be one of the Illegals.

Illegals can piggyback their way back to earth through pets. Like Densuke. It is believed that Megabaa has been looking for "lost pets" because one of them might have the cyber-spirit of her husband in them. (this is sort of guesswork, but very plausible)

We know that Yasako encounters Illegals twice , both when Densuke goes missing. Could it be that Densuke knows or is directed to the location of Yasako's grandpa?

So Haraken wants to get Kanna's soul back , Megabaa wants to get her husband's back, Amasawa wants her brother's back.

And in episode 19 we see that Kyoko enters the same stairway as in Yasako's dream.

I think, that Yasako and 4423 were both wandering in the space, then when Yasako met 4423, he sacrificed himself to protect Yasako and get her away from the Illegals. We don't know about that but i think it's safe to assume that Kyoko in episode 19 is going through the same experience that Yasako went through when she was younger.