Spoiler warning: Spoilers for the complete series, including the final episode.
Ka-young and Iblis die, then are reborn as immortal genies and reunite. Genie, Make a Wish reaches its happy ending only after the final wish exposes the difference between winning an argument about humanity and choosing the person one loves.
What does Ka-young ask for?
After her grandmother’s death, she asks to experience the full range of human emotion for one day before dying. The wish concerns her own experience, which appears to support Iblis’s claim about human self-interest.
Yet Iblis bows to her before granting it. His submission to a human breaks the position on which his wager with God depended, and Ejllael kills him.
The apparent escape clause therefore fails. Ka-young can make a wish that looks selfish while Iblis’s response still demonstrates that his love has changed the belief he meant to prove.
Why does she forget him?
Her memories of Iblis are removed, leaving the new intensity of her emotions without the full relationship that gave them meaning. Irem later restores those memories.
Ka-young nevertheless dies in the desert. Remembering him answers who has been lost; it cannot, by itself, prevent the loss or keep her human life intact.
Their deaths also complete the earlier wish linking their suffering. The present cannot be understood separately from the bond and missing memories established in the past-life story.
How can they be together afterward?
Ka-young is reborn as a Jinniya in recognition of her long devotion. Pan-geum refuses to enter heaven unless God acts on Iblis’s behalf, and he is reborn too.
The final reunion gives them a shared immortal existence, rather than returning them to the original human-and-genie arrangement with all its conditions unchanged.
Pan-geum’s intervention is crucial to that difference. The grandmother’s love remains active after her death, supporting the person she raised beyond the limits of the rules she once taught her to follow. The couple’s happy ending ultimately depends on care extending beyond the wager, not on proving that people can be reduced to either selfish or selfless creatures.
Sources: official ending breakdown.