Alright I'm going to throw a wild theory out here, and you guys can feel free to pick it apart. It's less a theory, and more a hunch that this might be what is going on. In any case, feel free to vehemently disagree.
One thing I couldn't make sense of story-wise this time through was the "True Firelink Shrine" area. The pitch black lighting to me seems to indicate that this is some sort of surreal experience, as does the fact that you are accessing a literal duplicate of another location in the game. However, you transition into this area via normal gameplay, and all of the items you pick up in this surreal area are actual items that stay on your character afterwards. The same is true of the Dragon Shrine area, which you seem to be accessing via meditation, and hence items you pick up there should not be accessible afterwards either, though in fact, they are. One final indication of something amiss is the Kiln of the First Flame at the end of the game. When you look around that area, you see the ruins of many other kingdoms, all on some supernatural decline into...well whatever lies at the bottom of the cliff you are atop. These and other things present a bit of a conundrum and they are what indicates to me that something is drastically off with our perception of the world in the game if we believe it is presenting a realistic occurrence of something in a real (though obviously fictitious) world.
Here's my theory: your character in each of the DS series of games is actually a person who really died in a real kingdom, likely one of those referenced in the game. I know that there are these references about being born with a dark sign and what not, but essentially, I say, disregard that. Your character lived a normal life in one of these kingdoms but he died, and what you are experiencing throughout the game is actually that character's experience of the afterlife. I'm not saying the dark sign doesn't have relevance -- rather, it doesn't mean literally what you are made to think it means by the game. It isn't a literal reality, but symbolizes something, or is a reality inflicted upon your reality by the outside. More on that later.
Now, in many different religions and cultures, the perception of the afterlife is that the spirit of a person leaves the body, and experiences in the afterlife occur in this disembodied state. The narrative sequence of the games that you play through is, then, a construction of your character's own disembodied spirit -- he sees what he/she wants to see, and makes of the world what he/she wants to make it. What would it be like to interact with other disembodied spirits in your own disembodied state, though? Well, I propose that you actually do just that when you interact with other NPCs and players in the world. Each of those other people have their own self-constructed reality which is subtly different than your own, and which you may participate in when you engage in jolly cooperation or invasions. They may have bosses alive that you do not, they may have performed or not performed different actions on the world that have a different effect on it than you did. Their world is their own, unique from yours, and you simply step into it, experiencing what it is like to be in their reality.
This makes sense of the "canon" NPC invasions in this game, some of which are real head scratchers if you think that the game is presenting a coherent depiction of a static reality. For instance, in your world, you have killed the rotting greatwood, and at the bottom of the pit of hollows is Hodrick's corpse. Yet, you are summoned into Sirris's world after you have done this, a world where Hodrick is still alive. WTF? Well it makes sense if her world is a distinctly different reality than yours. In your world, Leonhard doesn't exist in Gwynevere's room, yet in his reality he does.
So -- what about all this stuff about linking the bonfire and making choices to become a dark lord? Well, I think it is somehow symbolic, it is representing a choice the spirit of your character may make within his/her distinct reality. Perhaps linking the bonfire symbolizes that the spirit wishes to remain disembodied and in his/her current state, while to become a dark lord symbolizes -- something else? I'm not sure. There are quite a few unanswered questions this all raises, but it does make sense of some of the data much better than theories which posit the world of the game as a reality. Oh, finally, regarding the locations in the game, and the bosses, etc., I think they may or may not have been real things from the character's life, or they may represent distinct realities which are being forced upon the spirit from the outside -- i.e. other characters, or some other force is pushing them into the created reality of your character.
Also, and finally, this theory might be true only for this DS, or it might be true for all of them, or it might be true for some of them, I'm not sure. I would just propose that it is true for DS3, and possibly the other games as well.