I think it's an urban legend about how Totoro represents a Death deity, and the girls in the movie are in fact dead in an afterlife; some people even go as far as finding similarities with a murder case that ocurred in the area where the film is set and claiming the characters are actually based on the victims.

Here (http://cherrypistoru.posterous.com/?tag=ghibli) is a post, but I think you can find more by Googling Totoro+murder or Totoro god of Death.