So, the "she" that the lyrics mention is the poetess. What the poem says is what the song says as well: when one is about to die and knows to leave beloved one behind, the last wish is not to bind her/him with painful memory: either it's a happy memory, or oblivion is preferable.
Better by far you should forget and smile
Than that you should remember and be sad.
So, bewitched2982 got the spirit exactly right :-)
This song lyrics are inspired by a poem (actually, it's like a Robert Smith commentary on the poem): "Remember" by Christina Georgina Rossetti
See, e.g., http://www.englishverse.com/poems/remember
So, the "she" that the lyrics mention is the poetess. What the poem says is what the song says as well: when one is about to die and knows to leave beloved one behind, the last wish is not to bind her/him with painful memory: either it's a happy memory, or oblivion is preferable.
Better by far you should forget and smile Than that you should remember and be sad.
So, bewitched2982 got the spirit exactly right :-)