To be honest I used to think Bakugou’s death fakeout was a shitty writing decision but looking back from a philosophical perspective, I actually think it truly shows a state of enlightenment of Bakugou and it plays into his character development perfectly.
Bakugou emerged into the story as a headstrong and arrogant student who believed his abilities to be far above everyone else, with his ego not being able to handle being viewed as weak, such as when he got angry at Todoroki for not going all out in the tournament even though he won the battle. Through little moments, such as Bakugou fighting Deku, or Bakugou saving Deku from Shigaraki, Bakugou’s ego pretty much descends from the height it once was at: he doesn’t perceive himself as the unbeatable monster he used to be.
The raging ego he used to have reached its conclusion in his final battle against Shigaraki: he was humiliated by Shigaraki after his arm was shattered and his face was bloodied, but rather than focusing on his physical pain, the mental damage was truly what burnt. Even after awakening, he managed to reach his top physical form, with speed that was vastly superior to anything he’s ever achieved before; yet it still wasn’t enough. When Bakugou asks Deku if he could actually catch up to him, it’s not just about his physical attributes; it’s the whole package. While in a state of half-death yet moving at peak form, he finally realizes his pitiful weakness and that even on his best day, he won’t reach the heights that Deku can. And THAT is the real defeat, not Shigaraki’s heart-shattering blow afterwards.
The way I see it, it’s a beautiful way to show the ego death of someone who once thought he was the greatest thing ever.