Might be a vision/dream.
Red does equal bad, but Rey represents the convergence of light and dark, the end of "Jedi" and "Sith", the grey.
I think she kills Kylo and she makes a new light saber. For force users, making your own saber means you've reached the peak of your abilities.
Some are speculating that there's a significant time jump in this film; 10-15 years. The other two series had time jumps, but this one hasn't yet.