What's up with the fairies in the Verdant and Forest Factory stages? Are they creatures of the Backyard, demihumans, or something else? Also, the sorcerer controlling Leopaldon resembles them, could there be a connection?
Interesting observations...
Based on what we know Leopaldon is a genuine "manufactured GEAR", so it is unlikely that they have any connection with Demihumans (though it is possible that one portion of their original form was Demihuman before they BECAME a GEAR converted in to a Gear Cell Body... but that's strictly speculation).
That said, the last time we saw a traditional Witch Village was in Tioria and Edinburgh... though in those unique cases it was mostly Humans that resided there at that time.
The description of the stage is that it is "The stage of a hidden land, home to Fairy Apothecaries".
In all likelihood it is home to a great many Demihuman denizens (also known as Youkai or Fairy Folk... sometimes even Demons and Ghosts exist).
While humans don't have much extensive knowledge on Demihumans... it's been suggested that such places are now treated as Reservations and Nature Preserves in GG's Modern Era.
It also appears that some Humans still trade with Demihumans and interact with them on a strictly-business level...
