[proofplan]
We compare the penalized minimizer $u_\varepsilon$ with fixed admissible functions, for which the penalty term vanishes. This gives a uniform $H^1_0(\Omega)$ bound and also forces the constraint violation $(u_\varepsilon-\psi)^-$ to converge to zero in $L^2(\Omega)$. Compactness then yields a subsequential limit $\bar u$, and the vanishing negative part shows $\bar u \in K_\psi$. Passing to the limit in the variational inequality for the energies identifies $\bar u$ as the obstacle minimizer $u$, and a matching limsup-liminf argument for the Dirichlet energy upgrades [weak convergence](/page/Weak%20Convergence) to strong convergence.
[/proofplan]
[step:Define the energies and fix an admissible comparison function]
Define the obstacle energy functional
\begin{align*}
J: H^1_0(\Omega) \to \mathbb{R}
\end{align*}
by
\begin{align*}
J[v] := \frac{1}{2}\int_\Omega |\nabla v|^2 \, d\mathcal{L}^n(x) - \int_\Omega f v \, d\mathcal{L}^n(x).
\end{align*}
For each $\varepsilon > 0$, define the penalty functional
\begin{align*}
P_\varepsilon: H^1_0(\Omega) \to [0,\infty)
\end{align*}
by
\begin{align*}
P_\varepsilon[v] := \int_\Omega B_\varepsilon(v-\psi) \, d\mathcal{L}^n(x).
\end{align*}
This integral is finite for every $v \in H^1_0(\Omega)$. Indeed, if $L_\varepsilon$ is a global Lipschitz constant for $\beta_\varepsilon$, then $B_\varepsilon(0)=0$ and $\beta_\varepsilon(0)=0$ imply $|B_\varepsilon(s)| \leq \frac{L_\varepsilon}{2}|s|^2$ for all $s \in \mathbb{R}$, while $v-\psi \in L^2(\Omega)$. Thus $I_\varepsilon[v] = J[v] + P_\varepsilon[v]$. Since $K_\psi \neq \varnothing$, fix an admissible comparison function $w_0 \in K_\psi$. Because $w_0-\psi \geq 0$ for $\mathcal{L}^n$-a.e. $x \in \Omega$ and $B_\varepsilon(s)=0$ for $s \geq 0$, we have
\begin{align*}
P_\varepsilon[w_0] = 0.
\end{align*}
Thus minimality of $u_\varepsilon$ gives
\begin{align*}
J[u_\varepsilon] + P_\varepsilon[u_\varepsilon] = I_\varepsilon[u_\varepsilon] \leq I_\varepsilon[w_0] = J[w_0].
\end{align*}
[/step]
[step:Derive a uniform $H^1_0(\Omega)$ bound for the penalized minimizers]
Let $C_P > 0$ be a [Poincare inequality](/theorems/75) constant for $\Omega$, so that
\begin{align*}
\|v\|_{L^2(\Omega)} \leq C_P \|\nabla v\|_{L^2(\Omega)}
\end{align*}
for every $v \in H^1_0(\Omega)$. Since $P_\varepsilon[u_\varepsilon] \geq 0$, the comparison inequality gives
\begin{align*}
\frac{1}{2}\|\nabla u_\varepsilon\|_{L^2(\Omega)}^2 - \int_\Omega f u_\varepsilon \, d\mathcal{L}^n(x) \leq J[w_0].
\end{align*}
By the [Cauchy-Schwarz inequality](/theorems/432) in $L^2(\Omega)$ and the [Poincare inequality](/theorems/75),
\begin{align*}
\left|\int_\Omega f u_\varepsilon \, d\mathcal{L}^n(x)\right| \leq \|f\|_{L^2(\Omega)}\|u_\varepsilon\|_{L^2(\Omega)} \leq C_P\|f\|_{L^2(\Omega)}\|\nabla u_\varepsilon\|_{L^2(\Omega)}.
\end{align*}
Set $A_\varepsilon := \|\nabla u_\varepsilon\|_{L^2(\Omega)}$ and $M := C_P\|f\|_{L^2(\Omega)}$. Then
\begin{align*}
\frac{1}{2}A_\varepsilon^2 - M A_\varepsilon \leq J[w_0].
\end{align*}
The scalar quadratic inequality implies that $(A_\varepsilon)_{\varepsilon>0}$ is bounded. Applying Poincare again, $(u_\varepsilon)_{\varepsilon>0}$ is bounded in $H^1_0(\Omega)$.
[/step]
[step:Show that the violation of the obstacle constraint vanishes in $L^2(\Omega)$]
From
\begin{align*}
J[u_\varepsilon] + P_\varepsilon[u_\varepsilon] \leq J[w_0]
\end{align*}
and the uniform $H^1_0(\Omega)$ bound, there exists a constant $C_1 > 0$, independent of $\varepsilon$, such that
\begin{align*}
P_\varepsilon[u_\varepsilon] \leq C_1.
\end{align*}
Indeed, the uniform bound controls $|J[u_\varepsilon]|$ by the [Cauchy-Schwarz inequality](/theorems/432) and the [Poincare inequality](/theorems/75). By the lower bound on $B_\varepsilon$,
\begin{align*}
\frac{c}{\varepsilon}\int_\Omega ((u_\varepsilon-\psi)^-)^2 \, d\mathcal{L}^n(x) \leq \int_\Omega B_\varepsilon(u_\varepsilon-\psi) \, d\mathcal{L}^n(x) \leq C_1.
\end{align*}
Therefore
\begin{align*}
\|(u_\varepsilon-\psi)^-\|_{L^2(\Omega)}^2 \leq \frac{C_1}{c}\varepsilon.
\end{align*}
In particular,
\begin{align*}
(u_\varepsilon-\psi)^- \to 0 \quad \text{strongly in } L^2(\Omega)
\end{align*}
as $\varepsilon \downarrow 0$.
[/step]
[step:Extract a compactness subsequence and prove that its limit is admissible]
Let $(\varepsilon_k)_{k=1}^\infty$ be any sequence with $\varepsilon_k \downarrow 0$. Since $(u_{\varepsilon_k})_{k=1}^\infty$ is bounded in the [Hilbert space](/page/Hilbert%20Space) $H^1_0(\Omega)$, the Hilbert-space [weak sequential compactness](/theorems/214) theorem for bounded sequences applies. Hence there exist a subsequence, not relabelled, and an element $\bar u \in H^1_0(\Omega)$ such that
\begin{align*}
u_{\varepsilon_k} \rightharpoonup \bar u \quad \text{weakly in } H^1_0(\Omega).
\end{align*}
By the assumed compact embedding $H^1_0(\Omega) \hookrightarrow L^2(\Omega)$, equivalently the compactness property supplied in standard domains by the [Rellich-Kondrachov Theorem](/theorems/64),
\begin{align*}
u_{\varepsilon_k} \to \bar u \quad \text{strongly in } L^2(\Omega).
\end{align*}
The map $N: L^2(\Omega) \to L^2(\Omega)$ defined by $N(v) := (v-\psi)^-$ is Lipschitz with constant $1$, because $|a^- - b^-| \leq |a-b|$ for all $a,b \in \mathbb{R}$. Therefore
\begin{align*}
(u_{\varepsilon_k}-\psi)^- \to (\bar u-\psi)^- \quad \text{strongly in } L^2(\Omega).
\end{align*}
The previous step also gives $(u_{\varepsilon_k}-\psi)^- \to 0$ strongly in $L^2(\Omega)$, so [uniqueness of limits](/theorems/625) in $L^2(\Omega)$ gives $(\bar u-\psi)^-=0$ in $L^2(\Omega)$. Hence $\bar u \geq \psi$ for $\mathcal{L}^n$-a.e. $x \in \Omega$, and therefore $\bar u \in K_\psi$.
[guided]
Fix an arbitrary sequence $(\varepsilon_k)_{k=1}^\infty$ with $\varepsilon_k \downarrow 0$. The purpose of passing to sequences is to prove convergence as $\varepsilon \downarrow 0$ by the usual sequential criterion: every sequence of parameters tending to zero must have the corresponding functions tending to the same limit.
The uniform estimate from the previous steps says that $(u_{\varepsilon_k})_{k=1}^\infty$ is bounded in $H^1_0(\Omega)$. The space $H^1_0(\Omega)$ is a Hilbert space with its usual Sobolev norm, so bounded sequences have weakly convergent subsequences by the Hilbert-space weak [sequential compactness](/page/Sequential%20Compactness) theorem. Thus, after passing to a subsequence and keeping the same notation, there is some $\bar u \in H^1_0(\Omega)$ such that
\begin{align*}
u_{\varepsilon_k} \rightharpoonup \bar u \quad \text{weakly in } H^1_0(\Omega).
\end{align*}
Weak convergence alone is not enough to pass the pointwise inequality $u_{\varepsilon_k} \geq \psi$ to the limit, because the penalized functions need not actually satisfy that inequality. This is why we used the penalty estimate: it says the negative part of $u_{\varepsilon_k}-\psi$ tends to zero in $L^2(\Omega)$. The compact embedding hypothesis supplies the missing strong convergence; on standard Sobolev domains this compactness is the content of the [Rellich-Kondrachov Theorem](/theorems/64):
\begin{align*}
u_{\varepsilon_k} \to \bar u \quad \text{strongly in } L^2(\Omega).
\end{align*}
Now define the negative-part map $N: L^2(\Omega) \to L^2(\Omega)$ by $N(v) := (v-\psi)^-$. This map is well-defined because $\psi \in H^1(\Omega) \subset L^2(\Omega)$ on the bounded domain $\Omega$, and it is Lipschitz with constant $1$. The scalar inequality behind this is
\begin{align*}
|a^- - b^-| \leq |a-b|
\end{align*}
for all $a,b \in \mathbb{R}$. Applying this pointwise with $a=v(x)-\psi(x)$ and $b=z(x)-\psi(x)$ and then integrating gives
\begin{align*}
\|N(v)-N(z)\|_{L^2(\Omega)} \leq \|v-z\|_{L^2(\Omega)}.
\end{align*}
Therefore the strong $L^2(\Omega)$ convergence of $u_{\varepsilon_k}$ implies
\begin{align*}
(u_{\varepsilon_k}-\psi)^- \to (\bar u-\psi)^- \quad \text{strongly in } L^2(\Omega).
\end{align*}
But the penalty estimate already gives
\begin{align*}
(u_{\varepsilon_k}-\psi)^- \to 0 \quad \text{strongly in } L^2(\Omega).
\end{align*}
Since limits in $L^2(\Omega)$ are unique, we obtain $(\bar u-\psi)^-=0$ in $L^2(\Omega)$. This means $\bar u-\psi \geq 0$ for $\mathcal{L}^n$-a.e. $x \in \Omega$, so $\bar u \in K_\psi$.
[/guided]
[/step]
[step:Pass to the limit in the minimality inequality to identify the weak limit]
Let $w \in K_\psi$ be arbitrary. Since $w-\psi \geq 0$ for $\mathcal{L}^n$-a.e. $x \in \Omega$, the penalty vanishes on $w$:
\begin{align*}
P_{\varepsilon_k}[w] = 0.
\end{align*}
Minimality of $u_{\varepsilon_k}$ gives
\begin{align*}
J[u_{\varepsilon_k}] + P_{\varepsilon_k}[u_{\varepsilon_k}] \leq J[w].
\end{align*}
Since $P_{\varepsilon_k}[u_{\varepsilon_k}] \geq 0$,
\begin{align*}
J[u_{\varepsilon_k}] \leq J[w].
\end{align*}
The weak convergence $u_{\varepsilon_k} \rightharpoonup \bar u$ in $H^1_0(\Omega)$ gives weak convergence of gradients in $L^2(\Omega;\mathbb{R}^n)$. The squared $L^2$ norm is weakly lower semicontinuous, hence
\begin{align*}
\int_\Omega |\nabla \bar u|^2 \, d\mathcal{L}^n(x) \leq \liminf_{k\to\infty}\int_\Omega |\nabla u_{\varepsilon_k}|^2 \, d\mathcal{L}^n(x).
\end{align*}
The strong convergence $u_{\varepsilon_k}\to \bar u$ in $L^2(\Omega)$ and $f\in L^2(\Omega)$ imply, by the [Cauchy-Schwarz inequality](/theorems/432),
\begin{align*}
\int_\Omega f u_{\varepsilon_k} \, d\mathcal{L}^n(x) \to \int_\Omega f \bar u \, d\mathcal{L}^n(x).
\end{align*}
Therefore
\begin{align*}
J[\bar u] \leq \liminf_{k\to\infty}J[u_{\varepsilon_k}] \leq J[w].
\end{align*}
Since $w \in K_\psi$ was arbitrary and $\bar u \in K_\psi$, the function $\bar u$ minimizes $J$ over $K_\psi$. By uniqueness of the obstacle solution, $\bar u = u$.
[/step]
[step:Recover convergence of the Dirichlet energies]
Taking $w=u$ in the minimality inequality and using $P_{\varepsilon_k}[u]=0$ gives
\begin{align*}
J[u_{\varepsilon_k}] + P_{\varepsilon_k}[u_{\varepsilon_k}] \leq J[u].
\end{align*}
Since $P_{\varepsilon_k}[u_{\varepsilon_k}] \geq 0$,
\begin{align*}
\limsup_{k\to\infty}J[u_{\varepsilon_k}] \leq J[u].
\end{align*}
On the other hand, weak lower semicontinuity of the Dirichlet term and strong $L^2(\Omega)$ convergence in the load term give
\begin{align*}
J[u] \leq \liminf_{k\to\infty}J[u_{\varepsilon_k}].
\end{align*}
Thus
\begin{align*}
J[u_{\varepsilon_k}] \to J[u].
\end{align*}
Since
\begin{align*}
\int_\Omega f u_{\varepsilon_k} \, d\mathcal{L}^n(x) \to \int_\Omega f u \, d\mathcal{L}^n(x),
\end{align*}
we conclude that
\begin{align*}
\int_\Omega |\nabla u_{\varepsilon_k}|^2 \, d\mathcal{L}^n(x) \to \int_\Omega |\nabla u|^2 \, d\mathcal{L}^n(x).
\end{align*}
[/step]
[step:Upgrade weak convergence and norm convergence to strong convergence]
We already know that
\begin{align*}
\nabla u_{\varepsilon_k} \rightharpoonup \nabla u \quad \text{weakly in } L^2(\Omega;\mathbb{R}^n)
\end{align*}
and that
\begin{align*}
\|\nabla u_{\varepsilon_k}\|_{L^2(\Omega)} \to \|\nabla u\|_{L^2(\Omega)}.
\end{align*}
Using the Hilbert space identity in $L^2(\Omega;\mathbb{R}^n)$,
\begin{align*}
\|\nabla u_{\varepsilon_k}-\nabla u\|_{L^2(\Omega)}^2 = \|\nabla u_{\varepsilon_k}\|_{L^2(\Omega)}^2 + \|\nabla u\|_{L^2(\Omega)}^2 - 2\int_\Omega \nabla u_{\varepsilon_k}\cdot \nabla u \, d\mathcal{L}^n(x).
\end{align*}
The weak convergence gives convergence of the [inner product](/page/Inner%20Product) term, and the norm convergence gives convergence of the first term. Hence
\begin{align*}
\|\nabla u_{\varepsilon_k}-\nabla u\|_{L^2(\Omega)} \to 0.
\end{align*}
By the [Poincare inequality](/theorems/75),
\begin{align*}
\|u_{\varepsilon_k}-u\|_{L^2(\Omega)} \leq C_P\|\nabla u_{\varepsilon_k}-\nabla u\|_{L^2(\Omega)} \to 0.
\end{align*}
Therefore
\begin{align*}
u_{\varepsilon_k} \to u \quad \text{strongly in } H^1_0(\Omega).
\end{align*}
It remains to pass from subsequences to the full parameter limit. Suppose strong convergence failed. Then there would exist a number $\delta>0$ and a sequence $\varepsilon_k \downarrow 0$ such that
\begin{align*}
\|u_{\varepsilon_k}-u\|_{H^1_0(\Omega)} \geq \delta
\end{align*}
for every $k$. The argument above applies to this sequence and produces a further subsequence that converges strongly to $u$ in $H^1_0(\Omega)$, contradicting the displayed lower bound. Hence
\begin{align*}
u_\varepsilon \to u \quad \text{strongly in } H^1_0(\Omega)
\end{align*}
as $\varepsilon \downarrow 0$.
[/step]