Im so confused!!

1. Kihoon offered two choices to Yeon. This was after they discovered that they had past lives that ended tragically. (Remember, Kihoon is a certain type of soul or person who cannot have a fated someone or be tied to a red thread because it can cause them misfortune.)
2. Yeon realized that all of Kihoon's misfortune was caused by him (he forced a red thread on Kihoon when they were a kid). He chose the latter, where he wanted Kihoon to forget him.
3. The red thread app was actually sorry to Kihoon that this mishap happened, so it showed them the past life, if I remember correctly.

I'm not sure if I'm accurate, but that's just based on my understanding.

Basically, if I understand correctly, due to Lee Yeon tying them together in their last life, Hong Kihoon experienced a lot of misfortune because he is a red soul (a being who isn’t tied by fate and experience great fortune)

During season 2, Lee Yeon found out he was the reason why Hong Kihoon experienced so much misfortune in his life and even why he had to give up on his dreams of being a soccer player! (We also find out that Kihoon was afraid of going back to soccer because of Lee Yeon ((I think it was explained in an earlier chapter, it’s been a while since I’ve reread!)

And because Lee Yeon loves him so much, he asked Kihoon to forget him so he would be able to live the life destined for him— a life that isn’t plagued by misfortune and where he didn’t give up on his dreams!! （/TДT)/

And because Hong Kihoon loves his angel so much, he doesn’t deny his request even if it would hurt him so much

Basically in Season 2 we learned that the rock was in slumber which prevented it from stopping Yeon from reconnecting the thread of the Scarlett Child aka Kihoon to him, thus bringing immense misfortune and their demise in the first life. Fast forward two a second life Beta we'll say, the rock gave Kihoon redemption because he had all the memories of his past life (Let's just say mans went to heaven and got sent back). SO, in this Alpha timeline, Kihoon slowly gained his memories the more quests were completed with Yeon. Additionally, we learn from the rock that this Alpha timeline automatically connects Kihoon and Yeon as fated partners given he agreed to the terms of their "game of fate" in the Beta/Heaven timeline. The terms were, lose and only misfortune purges but memories of the pain and suffering forever remain tainted (especially once Yeon remembers at the end of s2), or win and essentially have the choice of remembering or not. Think commanded vs freewill of choice essentially. In Alpha timeline, they won the game, and so the parting gift the rock gave as it's final "atonement" was the freedom to choose to start over and forget, or remember. Yeon tells Kihoon to forget because in Beta and eventually Alpha, only Kihoon distinctively remembers everything for what it was (till the end of Alpha when Yeon does too that is). Yeon says it's his turn to remember and allow Kihoon to have a fresh life, aka the life he SHOULD'VE had had it not been for this misfortune, then the interference of the rock, as a futbol player. What I think the rock didn't anticipate is that fated partners are called such because despite all odds they will find each other eventually regardless of the timeline. Their "cannon event" if you will (i love Marvel and Miles Morales), so it's unavoidable. Thus why Kihoon is already in love cause remove all that happened and Kihoon is still Kihoon. Same personality, interests, instincts, etc. So changing the battle doesn't necessarily change the outcome if the stats are the same so much the opponent is different. But, the opponent isn't different. It's Yeon. So they'll end up together by the end of this season and I anticipate this being the final one then hopefully side stories.

Imo the main point is they tied with the red thread by ((force)) in their past life. Thats why the red thread rock give them a chance in this life, where they can start from the beginning, cmiiw