Alternate Dimensions

As theorized by Souma, there are parallel planes of reality. Some demis have the inate ability to tap into these other dimensions.

In an experiment a Dullahan and Zaraka-Warashi being in close proximity restores the former's neck and gives the later existence on plane A

Dullahan
A Dullahan's neck exists in another dimension. Its what allows a Dullahan to have its head exist sepearately from their body. The "flame" may be a spacial distortion left behind. Machi confirmed that an endoscopy revealed she still had a throat.

This can be called Dimension B

Zaraka-warashi
While they exist, its on another plan of existence. We'll call this one Dimension C. Those whose home they inhabit can see them, but they cannot be seen by anyone else. For example if the warashi throws a ball, the one who can see them is being seen throwing it by those in Dimension A. Even if the "haunted" person is not physically moving, they are the peceptual proxy; if the child makes physical contact with someone else from Dimension A, the "haunted" is percieved instead.