The tipoff to the book's deeper, darker meaning comes early, when an elderly Englishman whose Hollywood career is in a terminal nosedive makes passing reference to a magazine piece about Soviet scientists who are said to be keeping a severed dog's head alive: "It dribbles at the tongue when it smells a cat. That's what all of us are, you know, out here." The aging Englishman means "out here in Hollywood." But Waugh means "out here in the world where materialism reigns."
The point of what seems to be a casual aside becomes devastatingly clear late in the story, when the body of a Whispering Glades cosmetician who has taken her life at her workplace (to the huge embarrassment of the head mortician, her suitor) is surreptitiously disposed of in the crematorium of the Happier Hunting Ground.
Waugh could be riotously funny when he set his mind to it and there are amusing stretches in The Loved One, but the book as a whole is satire in the tradition of the Roman poet Juvenal and Jonathan Swift, a satirist whose "A Modest Proposal" skewered British attitudes toward the Irish by suggesting cannibalism as the solution to Irish poverty.
Waugh for his part is taking deadly aim at philosophical materialism and its implications for human self-understanding. If the materialists are right about human beings, he's slyly saying, there is no special reason to make a distinction between the two cemeteries of his tale or to turn up our noses at those Soviet scientists and their dog's head.
Evelyn Waugh had a reputation for being a disagreeable man. One of his friends once asked him how he could be so unpleasant and still claim to be a Catholic. To which he replied: "You have no idea how much nastier I would be if I was not a Catholic. Without supernatural aid, I would hardly be a human being." In its own brilliant way The Loved One makes the same point.