No one's saying it forgives Norman for anything. Sure, that's a big problem in storytelling, giving the villain a bad childhood in order to let them off the hook, but that's not what this story was about.

It was about seeing what makes Norman tick and whether he could get Peter to embrace his ideals (spoiler: he doesn't, but he comes far too close for Pete's comfort). Maybe this humanises Norman a bit, but I don't think humanising = forgiving. If anything, I find Norman the most frightening when he's like this, a more human sort of evil than the way he's normally written.