Every living creature has its aura. The color of the aura depends on his/her current state of health, personality, and many other factors. It even changes color depending on these same factors.
Every mortal with an aura has a "balloon string" attached to them; this is the person's soul. When it is time for them to die, Atropos will appear and cut it, sending the soul to Ka, the Great Wheel of Being. Immortal creatures still have auras, but no balloon string, implying their immortality (not implying that they are soulless).
The Purpose and The Random
There are two types of death; Purposeful and Random. Every living creature has a set lifespan. When it is time for them to die, their aura turns black, becoming a "deathbag". Here, Atropos will appear and cut their spirit string away from them, sending their souls to Ka. This is a Purposeful death.
Random deaths are not caused by Atropos, hence their name. This happens whenever a person dies before their set life-span ends. Random deaths are almost always violent, and tend to be caused by suicides, murder, and war.
Sometimes, a mortal known as one of "The Great Ones" is born. This person must die their Purposeful death. If not, it sets into motion a chain of events so cataclysmic and disastrous that it could destroy everything in existence.
The Hyperverse Ghost Theory
Ghosts are the result of a person dying a Random death. Having been suddenly and violently stripped of their life, they are confused, frightened and angry, and their spirit is unable to join Ka. And so they haunt our world, looking for help, or vengeance.
"Guardian Angels" and "Demons"
On rare occasions, a soul that is meant to be sent to the Ka will choose to stay behind, usually to watch over loved ones. They are often referred to as "Guardian Angels".
The same thing may happen to a person who dies a Purposeful death but was utterly malicious and evil in life. Their spirit will stay behind, and become a demonic force.
Conflict with the Putriverse
The Realm of Decay is the evil parallel to the Hyperverse, and home to Buer, the Black Wheel of Decay. Buer is the polar opposite of Ka; he represents malice, blasphemy, and the foulest of evils.