WARNING: The following contains spoilers for Episode 11 of Shadows House, "The Dark Drink," now streaming on Funimation.
Shadows House spent its first ten episodes running around the mystery surrounding the Noble family: the nature of the Shadows and the origin of the Living Dolls. In Episode 11, "The Dark Drink," the truth about the symbiotic nature of Shadows and Faces is finally revealed.
The Noble family are a very special kind of morph -- a fairy-like creature with mimic abilities -- who have evolved over a couple of generations and have managed to brainwash everyone living in the area that surrounds their sprawling mansion.
Episode 11 opens with Dorothy and Ryan, the aristocratic Shadows of the Adult Building's third floor, riding on a luxurious train -- the same one that appears in Shadows House's closing credits. It is their turn to visit a nearby town, and Ryan, a usually aggressive Noble, is not too happy about mingling with "human peasants." Dorothy, however, enjoys the attention and respect bestowed on them by those brainwashed humans, who live in a constant state of trust and gratitude toward the Nobles due to the soot-laced smoke from the train and Noble House.
The major welcomes Dorothy and Ryan like royalty and takes them to the "offering hall," where all of the village's children have gathered. Ryan doesn't quite engage with the kids, but Dorothy is delighted, with a sweet word for everyone and a wish to "take more girls this time." After chatting with the children, Dorothy and Ryan settle on one little boy and two girls, announcing they've been chosen to live at Noble House, in the lap of luxury, and offer them a bitter drink that knocks them out. The major rejoices -- his daughter was among the chosen. He will never see her again.
The Living Dolls in Shadows House are not dolls at all, but real children who have lost all memories of their families. Dorothy and Ryan carefully carry them to a dark room in Noble House, laying each of them on a stone slab. While the children sleep, undeveloped morphs will observe them, until each one gets attached to a specific kid and starts mimicking their appearance. That's how the basic shape of the Shadow Nobles is created: an unevolved morph trying to look like a sleeping child. At that point, the new Shadow will be carried to their luxurious room and the human child to the servant's quarters. They will be encouraged to interact as much as possible to develop a bond.
A strong bond is essential to form the personality of the developing Shadow Morph, which will be a reflection or a complement of the child's. Most Morphs feel strong affection for their Faces. Despite the artificial class difference imposed on them and the strict rules that oppress human children, the feeling is often mutual. Older Nobles encourage this relationship, as it is essential to unlocking the next stage and the best-kept secret of Noble House: the merging.
Once the Face and the Morph have attained perfect synchronicity, the Nobles expect them to merge. This is a very dangerous ceremony where the morph will take over the human's body, effectively killing the person they were before but achieving a permanent, formidable channel for their soot powers and a way to seamlessly interact with the human world. That is if the merging doesn't kill humans and morphs alike.
A weakened child can cause the morph's death. Likewise, a hesitant morph won't be ruthless or strong enough to destroy a human. Lack of love and compatibility is also bad for the merging, but too much affection and true friendship will get in the way, as the morphs won't want to kill their best friend. This is why Edward kept detailed reports on every one of the children and explains why he was so pessimistic about Shirley from the start -- he was trying to predict whether they were compatible for merging. It's also why Ryan lost it when he realized that Edward's Debut had the unintended consequence of encouraging affection and respect between Shadows and Faces. If the Shadows felt like the Children were their equals, they would never want to merge.
Curiously, the morphs do not seem to retain any memories from their pre-Noble stage, which might be because they did not have human thought patterns before they started mimicking the children. The morphs do not seem to be evil in and of themselves -- no more than a chameleon -- but the system these Nobles have created to perpetuate their existence in Shadows House is absolutely horrifying for everyone involved, growing creepier with every complacent smile and praise to the Noble family's generosity.