Is Buffy the vampire slayer really in a mental institution?

Answer 1

We never find out if Buffy was ever really in a mental institution. Joss Whedon, with his extraordinary plot skills, lead us to believe that Sunnydale and all of Buffy's world was real, but it could be that this girl was insane and this whole world of witchcraft and crime fighting was made up in her insanity.

Actually, we know for sure that Buffy was put in an institution briefly when she was 15, after she saw her first vampire. What we don't know is whether she stayed there. In "Normal Again," she wonders if her visions indicate that she never left and the world of "Sunnydale" is made up. And we never do find out, though the popular opinion is, generally, that she is not.