Obviously there’s plenty of literal dementia in AW2, but the dementia patients you meet are mostly harmed by Alan’s writing. Pat didn’t forget Wendy died. Cynthia didn’t lose the Angel Lamp or forget Tom’s job, it all changed around them, like Saga and Watery
I don’t think I’ve seen anyone discuss Alan Wake 2 being about dementia. Aging, sure. But the Dark Place is dementia. Alan loses time, his reality is makes no sense, he lashes out, hurts people, terrorizes Alice, but they still care for him. Everyone knows that’s not him.