I like to agree with the idea that humans died out. If they werent sucking the life out of the planet, the Shinra, then they were using their products, the Mako energy and such. Even AVALANCE killed people during their bombings, showing that humans are selfish.

As for the children's laughter at the end, do we see any children? Where would they live? I see it as the laughter of children dying out, as there is no more human children to laugh. Not all humans were bad, but they were lazy, as they originated from lazy Cetra, the ones who left for a less tiresome life.