Okay. Here we go.
I'm gonna try to explain this as best as I can. (Or at least as much as I understand.)

Separate timelines:
Timeline A: Marisa fails to convince Reimu to not use the spell of erasure. Bad future.
Timeline B: Reimu dies and takes Gensokyo with her. Marisa and Yukari escape to the outside world.
Timeline C: Marisa challenges Reimu to a spell card duel and kills her.

We'll start with Marisa A (our protagonist) in Timeline A. She is put in suspended animation and wakes up 80 years later. She goes to the shrine and meets Yukari, then goes to the woods and meets Reimu's great granddaughter (We'll refer to her as "Hakurei"). Eventually she realizes what happened and after Mima beats Hakurei, Yukari tells Marisa to go back in time and terminate Reimu. Mima throws Hakurei in after her. They end up in Timeline C.

Now, let's talk about Marisa B (black-haired, then short-haired Marisa). In her timeline, Reimu collapses Gensokyo just before she dies and Yukari pulls Marisa into the outside world. Marisa asks Yukari to send her back in time to try again. Yukari sends her to Timeline C.

Okay, Marisa C (the sleeper). She is put to sleep before anything happens.

The events of Timeline C: Marisa B arrives and puts Marisa C into suspended animation. Marisa A and Hakurei arrive and head for the shrine. Marisa B arrives at the shrine and finds Marisa A already there. She stays hidden and watches everything. Reimu has her meeting with Yukari and the Youkai scatter into the woods. Reimu is found by Aya and Nitori, who are then found by Hakurei, and then they all are found by Marisa A. Marisa A challenges Reimu to a duel and kills her. Reimu is brought back by divine intervention (by Mima being channelled through Hakurei). As a side effect, Reimu no longer remembers anything that just happened, including the spell of erasure. Hakurei promises never to use the spell, and is returned to Timeline A.

This is where things get tricky.
Marisa A goes home and finds Marisa C frozen in time. She is then confronted by Marisa B who plans to kill them both and become the "real" Marisa. Marisa B is pulled into a gap by Yukari and sent to the past of Timeline A. She finds Marisa A sleeping, but can't bring herself to kill her, so she simply freezes her in time. She then tries to convince Reimu not to use the spell of erasure and fails. (this leads to the bad future) She spends the next 80 years watching over the sleeping Marisa A while posing as Mima to blend in. 80 years later, Marisa A wakes up, goes to the shrine, meets Yukari, finds Hakurei, blah blah blah, and gets sent to Timeline C. Marisa B (posing as Mima) immediately dies because she's just so OLD.

As for Marisa A, now living in Timeline C...I guess she just lives life as normal, living in the forest, eating strange mushrooms, solving incidents, all while watching over the still sleeping Marisa C. (Which I guess would make Timeline C the new "official" timeline. Or at least it would if this story were canon, which it's not.)

Wow, that was a lot. Hopefully it makes sense. I really only understood it because I already heard another explanation on a different forum. Thanks, Shadowjack, wherever you are.