This is “See You Tomorrow” from RPG “OMORI”, which is about overcoming trauma, created by OMOCAT.
This is composed by Pedro Silva.
The soundtrack is here.
OMOCAT, the creator of the game, cites “Earthbound” as an influence on this game, but also says that it is influenced by other famous games in Japan, like “Pokemon”, “Legend of Zelda”, etc.
(Interview Note:Japanese only)
This song is played in the evening, after the main character wakes up from a dream and walks around the town with his friend.
It feels like a small break between stories.
It’s a smooth progression, descending from I to V by semitone using the subdominant minor (bVII, bVI).
In particular, the diminished chord in bar 16th gives a sense of melancholy because it has the darkness of the minor key (at around 0:53).