The Blair Witch Project ends with Heather descending the stairs to the basement. She enters a room and sees Mike with his face in the corner of the room. Heather is screaming his name but he doesn't turn around. The camera hits the floor, implying that Heather was knocked to the ground and probably killed. Then it ends.
As most of us realized, upon watching this final scene, this "facing in the corner while the other person is killed" scenario ties back to the beginning where people are telling the story of Rustin Parr. This was a guy who was influenced by the Blair Witch to bring children in pairs to a house in the woods and kill them. He didn't want the children to watch him kill the other, so he had one stand in the corner while he killed the other. Its not completely clear how he was influenced by the Blair Witch (phyiscally threatened, spiritually possessed Rustin, etc.). Later, he admitted to these crimes and was hanged.
Fast forward to the present day story:
Each night the main characters are camping in the woods, they hear noises coming from all directions. One night, the noises are very loud and they run away from the tent. When they return, the find that one of their backpacks and clothes were all spread out, covered in some sort of slime. After looking through it, they realize it looks like Josh's belongings were singled out, as his clothes were the only ones to get covered in the slime.
The next night, they take turns sitting outside the tent, keeping watch. The next morning they realize Josh is gone. As the movie goes on, you hear Josh screaming from a distance, and one morning they find a roll of sticks contain what looks like bloody teeth or bone wrapped in Josh's shirt.
Near the end, Heather and Mike hear Josh screaming, which leads them to an old house. This is where the final scene occurs.
It seems that most people come to the conclusion that the Blair Witch kills Heather (and probably Mike) here. I disagree.
First of all, let's look back to the story that is told at the beginning of the movie. Each of these killings involve 4 people/entities: 2 victims, 1 killer, and 1 Witch. In these stories about the children murders, the Witch was never the one killing them, she influenced someone else to do it for her.
The witch does not kill Heather and Mike, just as she didn't kill the children. Josh did. If the Blair Witch used someone else (Rustin Parr) why would she do it herself now? Especially since she now, presumably, has someone in her possession (physically or spiritually, depending on how you look at it). She even seemed to single Josh out from the very beginning of the group's filming project with the slime, and taking him from the group. Josh was not calling for help when he was in the cabin, he was luring Heather and Mike. And the Blair Witch did not kill anyone, she influenced Josh to do so, just as she did to Rustin.
The Blair Witch Project is one of my favorite movies. <3