The key to the story, in my opinion, is the doubt on whose truth here is real. Indeed when I first read the novella in my youth, it never occurred to me that the ghosts weren't "real" and not possibly a figment of an over-emotional young woman's imagination. Re-reads and re-viewings of the piece have brought me round to this, I think, intended more ambivalent (and ultimately satisfying) interpretation so that I was disappointed that that this high-production-value version seemed to cleave so much to the former viewpoint, i.e. that the malevolent spirits were real - this evidenced by the ghosts "appearing" in the imagination, for example of the young doctor who attempts to understand and salve the troubled mind of the disturbed young governess.
Another source of confusion and disappointment was the transposition of events to post-First World War England. If the lead character had been a young man, just back from and possibly their mind affected by the war, then a case for this change of context, could be argued. In every other respect though, the film plays as if in a 19th Century time-line thus throwing the narrative off-kilter. I could also have done without the sub-Lady Chatterley cavortings of both the governess in her imagination with her new employer (who, good looks apart and a self-confessed seducer of previous servants and governesses), hardly seems able to be responsible for her graphic fantasising, as well as the crudely physical liaison that the phantoms Quint and Jessell portray.
The film takes this shock-Gothic outlook to extremes with scenes suggesting the actual possession of the children by their malefactors but it's all done in a very sub-"The Exorcist" way and in the end I felt it wrong to come down so conclusively on the side of the demons.
The acting was mixed in quality, the children unable to portray the duality of their personalities convincingly and the actor playing Quint lacking menace entirely. However, Michelle Dockery, as the stricken governess, was convincing in both appearance and conviction, with the omnipresent Sue Johnston a sympathetic foil as the bemused house-matron.
There were some scares deftly inserted along the way, punctuated effectively by well-crafted background music, but as I said earlier, the modernising of the story to include the nudity and violence depicted here, overpowered, to me anyway, the thin line between fantasy and reality that served the original book so well.
A great story, lost somewhat in this particular re-telling.