That’s a weird choice for this production. In the script, it just says something like, “Lee jumps up, Austin makes a move to flee, but Lee blocks his exit. They stare at each other as the sound of a coyote is heard in the distance.”
It’s suppsed to be a theatrical “tableau,” but no, it was not a dream, Lee is alive, and probably about to beat the sh*t out of Austin. It’s supposed to end on a question mark, like My Fair Lady. Except with two dudes in 1980’s California.
And then there's the possibility that they've always been in the desert . . .
When Fool For Love (also Sam Shepard) played on B'way a few years back we got to speak with the cast after the show. We had seen the show at Williamstown a year earlier and had noticed some subtle differences. Found out that at least according to the cast member who volunteered the info, that the script allows room to play with the story, at least in terms of pauses, and actions that accompany the words. There was a huge pause near the end of that show which hadn't been at WTF, which is why the subject came up.
One of the most striking things about Sam Shepard's plays, especially True West, is the blurring of realism and surrealism. In Buried Child, True West, and Fool for Love, to name a few, the setting and dialogue are very realistic, but the characters and the plot are always a little off. It's almost as if actors from a surreal world are putting on a realism play. That's why the last two answers (that they're in their Mom's house the whole time & they were in the desert the whole time) are both correct, or both wrong at the same time.