Danny always needed to become Phantom, for everyone’s sake. And the Observants knew this well, so they made sure he would be exactly what they needed and wanted.
The Observants remember the day clearly, the day a human child opened a portal into their realm. Subsequently dying instantly, yet only halfway. The very fabric of the Ghost Realm had shook with shock and the boys' screams had filled every inch of the Realm. The hole that was torn sucked in ectoplasm like a massive black hole, bombarding the boy with ectoplasmic energy. Creating the world's second halfa and the start of a heroes career, protecting his human town and the humans in it.
...Or that’s how the story goes, what everyone believes to be true. And that’s what they have to believe, for the town’s sake, for Phantom’s sake, for the Realms sake.
And most of the story is indeed true. They boy truly was a halfa, and a hero. But what the Observants covered up, made sure not even Phantom knew, was that the portal he created had pulled in so much ectoplasmic energy that it had enveloped and killed the entire town. In an instant pulling the whole place into the Ghost Realm. Every single human, animal, plant, and insect becoming ghosts due to the massive shock of pure ectoplasmic energy. It had thrown the geography of the Realm askew and created a massive new pocket in the Realm.
But they had seen this coming, knew it would happen. So they had prepared, made sure the area where the town would merge into their Realm, was closed off and empty. Dubbing it the Barren Lands, and warding other ghosts away from the place. When the town finally did appear, the portal the boy activated became the only access point between the Barren Lands and the rest of the Ghost Realm.
ClockWork had come to them then, knowing this was going to happen as well as they did. ClockWork had done their job, freezing the town in time. Ensuring not a single of Amity’s ghosts ever actually saw or realised they were ghosts. While the Observants did their duty. Casting glamours on everyone and everything, returning it to how it looked before death. Sealing away any powers, hiding the ecto-signatures, making their ectoplasm mimic human blood and organs, heartbeats, pulses, brainwaves. They did this for everything and everyone, except the young halfa. Who by his very impossible nature, would be too unstable to dare mess with. But it was far more than that.
The Observants knew, had seen, who he’d become. Phantom, the High King of ghosts. The most powerful, but irrevocably merciful, ghost to ever exist. The trials and errors he needed to experience. And the sad truth was, he couldn’t experience those without being a hero and protector to his ‘humans’.
Because in truth, there was nothing truly wrong with letting the entire town exist in its natural ghostly state. The Realm was more than used to adjusting to massive influxes and geography changes. Especially with the prep work having been done. But then Phantom wouldn’t grow to be who and what he needed to be. What they needed him to be. What both Realms needed him to be.
He wouldn’t have grown the be adored as a hero and protector. He wouldn’t have learned how to hide and lie. He wouldn’t have learned how to battle and provide first aid. He wouldn’t have been given all the hardships. He wouldn’t have learned to deal with hunters. He wouldn’t have had to fight battles alone or believe that everything relied on him. Because, in the end, everything did rely on him becoming Phantom. Not just another ghost. Without all the lessons he wouldn’t be Phantom. He’d just be Danny the halfa, as average as any full ghost outside of his biology. If the town’s folk knew they were ghosts, that the whole town was dead, and thusly knew Danny was a halfa. He would have been much more of an outcast and he never would have felt like a wolf surrounded by sheep.
So they built an illusion for him, his own private world in the form of a small town and it’s people. Procured something for him to protect, something to keep him tied to his humanity. A little habitat to hide away in, and to hide himself from. A stage for him to struggle on, with an audience intentionally made unable to help much. Because heroes are built-in storybooks, fabricated by writers always looking to the future for the best end result. And suffering heroes make for the strongest ones.
They made sure this illusion worked in all directions as well, not wanting to risk any ghosts finding the truth or knowing what they had done. As far as the rest of the Ghost Realm knew, Amity was a human town in the Mortal Realm filled with humans and their one halfa protector.
So the boy went about his half-life none the wiser. Learning, growing and being guided into who he would become. And they all made a decision, that the boy was to never ever know. That the blame of killing off the whole town instead of just himself would destroy him. Being indirectly responsible for just six deaths was enough to break him. So this being discovered could not be allowed.
That, however, had left them with a problem. The ghosts made ‘human’ would eventually have to ‘die’. Of course, if any of them ‘died’ non-natural deaths that would be bad for the development of the future High King. So they had allowed the ‘humans’ to retrain a ghosts heightened durability. Able to handle legs getting crushed in lockers without sustaining broken bones. Buildings coming down on them with nothing but scratches. Ensuring everyone would ‘die’ of old age or sickness. At which point an Observant would take the ghost to be relocated into the Ghost Realm proper. Never telling them of the fact that they had actually been dead for a while. Not only would telling them the truth risk the town and Phantom finding out. But informing someone they’ve been dead for a while and were forced not to know it, well that was a level of cruelty they’d rather not stoop to.
Of course, there were other issues, humans liked to travel and logically some of the ‘humans’ would move out of town. Which is why they made it so that any of the Amity ghosts would be subtly transported to the Mortal Realm if they went far enough out of Amity’s/the Barren Lands territory. They would inevitably mistake the need to return to the Ghost Realms ectoplasm rich environment for homesickness. Returning to Amity either periodically or permanently. By the same logic, humans could easily visit the town, never knowing they were actually in the Ghost Realm.
But one thing the Observants couldn’t truly do away with was that all ghosts had ghostly nature, it was unavoidable. Resulting in all of the Amity ‘humans’ being strange and intense to actual humans. The Amity people seemed to pass this off as the ‘charm of small-town people’ and ‘being so used to ghost attacks has made us too weird for the rest of the world to handle’. They never came off weird to each other, since ghost nature wasn’t strange to other ghosts. Also insuring that no one noticed any of Phantom’s ghostly behaviour. Sure that was also partly because the Observants had placed a glamour over their eyes, making them unable to make the visual connection between Phantom and Fenton and never noticing his transformations or power usage. Only those that Phantom himself deeply wished to know stood a chance of ever finding out, under normal rules of reality anyway. Of course, if Danny actually saw anyone seeing him transform then they would indeed see it, since logically they should. But overall, his secret was perfectly protected regardless of how obvious it generally was.
There had been some problems of course. Most notably because the town was very much Phantom’s lair, meaning he had a level of control over it that he simply would not have if Amity was still alive and not part of the Ghost Realm. But as expected, Phantom passed it off as one of the weird aspects of being a halfa. And since he knew he shouldn’t have much control over a human town, his body subconsciously suppressed altering the town or its inhabitants. Effectively reinforcing the illusion. Just one of the many aspects of Phantom that was just endlessly helpful.
There had been plenty of close calls, Pariah and Freakshow being the worst. But thankfully both had caused too much chaos for anyone to realise that some of the things that were happening, shouldn’t be. They knew that would be the case but they still worried, still fretted that their elaborate game, the story they had weaved for the young boy, would come apart at the seams. But these were also the most vital things he needed to experience. Needed to see acceptance from his family, needed to fight back against his own mind being controlled by outside forces, needed to earn the right to rule. So it had to happen and they had to watch, filled with trepidation all the while.
Eventually, they grew rather comfortable to leave the town and Phantom to his devices, feeling content and comfortable in the growing prince and his fairytale storybook lair. Where everyone and everything wore the mask of life, with only him being left untouched and true to what he really was.
ClockWork, meanwhile, waits for the day when Daniel’s power will inevitably surpass that of even the Observants as a collective whole. When their fabricated reality can’t touch him anymore. He’ll be strong enough to handle the blow by then and the truth is something he deserves. Now the Observants don’t know, of course not, they would try to stop it if they did. Since Daniel’s most likely future actively and explicitly involved him not finding out. But there were far more where he did find out and ClockWork had no issues manipulating and altering things here and there to ensure he would find out the truth. Just when he was ready.
Which is why ClockWork had let Daniel go back in time, to ‘fix’ Vlad’s ectoacne without any kind of real instructions. It had altered what the Observants could see of Daniel’s future and it secured his path. When they had found out how his future had changed, they had tried to force ClockWork’s hand. To not let Phantom go into the past, only for them the be shown that Daniel’s two friends would die subsequently. Which definitely could not be allowed to happen. Of course, ClockWork could have simply told Daniel to just observe not interfere. But there was no way ClockWork was going to let the Observants in on that information.
But for now, ClockWork will guide and teach Daniel. Prepare him for his future and provide the level of support and understanding only a near endlessly powerful Ancient ghost could provide. While Daniel went through the pages of his story, to rise at the end as not only a hero but a king of kings. Eventually shattering the illusions and stepping into reality in full, pulling Amity along with him. It’s ghosts granted their true forms and earned abilities, given their rightful place as the closest and direct subjects of the High King of Ghost.