Lestrade still couldn't believe what had happened. He knew Sherlock for years and, unlike what Donovan and Anderson seemed to think, he knew that he cared about others more than he demonstrated.
If it wasn't for his confession, they wouldn't even know of all the people he killed. It was difficult to differentiate between what was real and what was fruit of his imagination. When he was taken to the hospital after an overdose of cocaine, he kept saying that Moriarty had killed Mrs. Hudson and John had tried to kill him.
Mycroft was shocked to discover his brother's madness, and it wasn't difficult to convince the police that his place was in a mental institution with a treatment program for addicts, and not in a prison. The fact that the only proven crimes were the murders of Molly and Mrs. Hudson also helped. Nobody would ever know if Sherlock had actually killed the people involved with Moriarty, but as Mycroft wasn't able to find them, that was likely.
While nobody knows exactly how to explain how hallucinations of Sherlock worked, Mycroft was convinced that he created Moriarty and killed Molly because it was the only way to be shocked enough to stop his revenge, and that the death of Mrs. Hudson was an accident that made him feel so guilty that he attempted suicide.
For years, both Mycroft and Lestrade visited Sherlock the hospital. They were the only ones who still cared about him. However, both doubted that their visits had any effect. After confessing his crimes and being hospitalized, Sherlock went completely out of reality and went to live in a world where he and John were still working together and Moriarty didn't existed. And even if they both wanted him back, both, in their own way, understood that this was the only way he had to continue to exist.