
Furthermore, you learn that under her rule, insects were reduced to following a hivemind-like, basic instinct.
The Radiance partially resembles a moth, as moths are attracted by light. Even though she is no longer in the physical world, she's still able to affect it as seen by the existence of the Hate Plague, so it stands to reason that dying against her would kill the Knight in the physical world.
Why does dying to The Radiance kill you for real instead of kicking you out like every other Dream Boss? The Radiance is the original wielder of dreams, and ever since becoming an Un-person has only been able to live trapped within a dream (the Hollow Knight's), her original sphere of power. Adding to this, Grimm's vampire-esqe design is probably based on the real world vampire moth, the Calyptra.