It should be noted that the story opens with two short sentences:

She was a writing medium. This is what she wrote:--

A medium is a person who can supposedly communicate with the dead, so a "writing medium" must be a person who takes down dictation from dead persons. (Other mediums usually allow the dead to speak through them in their own voices, or approximations thereof.)

The rest of the story is told in the first person by a man who is dead, although we don't fully realize that fact until the very end. This is because the explanation about the medium is so brief and because we get caught up in the dramatic action involved with a man desperately trying to steer a runaway automobile down a steep, winding hill.

The story suggests that people continue to exist after death. They are conscious of everything around them and are able to communicate with other dead people but are invisible and insubstantial as far as the living are concerned.

Arthur Conan Doyle had a problem with writing this story. He wanted it to be a first-person narrative--but how could the narrator tell his own story if he was already dead? The solution was to have the dead man dictate his story to a medium.

It is well known that Doyle became a convinced believer in spiritualism, especially after he had a beloved son killed in World War I. So "How It Happened" is not just a fantasy written to amuse readers. It expresses something that Doyle himself sincerely believed. He attended many spiritualist seances hoping to communicate with his dead son and with other deceased persons, and he devoted much writing time to promoting spiritualism and other supernatural phenomena. This was considered odd by skeptics because Doyle was the creator of the supremely rational, skeptical Sherlock Holmes.