Last time that I was writing about Fable 2 I mentioned that Fable 2 took me by surprise particularly in spite of my preconception of what the story was about. I've got a (sadly) long list of things that irritate me about "high fantasy", and the irritations more often lead to boredom than anger, because they keep me from building any sort of connection or interest in the story. That all mostly boils down to my growing hatred of J. R. R. Tolkien as a token of the fact that just about every author since has inherited many of Tolkien's worst qualities [1] while missing Tolkien's few true gifts [2].

One of the things that makes Fable 2 a better story than I expected is a simple, perhaps subtle, underlying thread in the mythology that I think does well to surpass/pervert the Tolkien legacy: the Fable universe is soylent [3]. Tolkien peopled his geography with a set of races created by a bizarre collection of gods and forever at war with each other due to the manifest superiority of one race over another; orcs are bad and elves are the best [4]. Fable inherits the dualism (good/bad morality being a cornerstone of the game, after all), and yet manages to avoid the racism. The separating distinction between groups that you fight in Fable is not based on "what people are", but rather "what people become", and that is a wonderful world of difference.

The first villains introduced in Fable 2 are bandits, and I don't even need to explain that they are villainous by vocation rather than genetics. Second are the Hobbes and they are immediately introduced alongside the fact that Hobbes are children that succumb to evil ways, perverted with the help of the Shadows, a creature formally introduced much later in the game. It's a classic fairy tale technique used to good effect: warning children that should they seek evil they shall be "rewarded" to become monsters that revel in it, and be to the rest of the world nothing but hideous monsters. The same thing is applied to the "ghouls" of Gaiman's The Graveyard Book, and I think that is a favorable comparison to make.

The Hollow Men are vengeful spirits in zombie bodies, and also easily recognizable as perversions of people. The Balverines [5] are werewolves, people perverted by the worsts of animal nature. Fable 2 doesn't elaborate on the werewolf connection, but the puppet show does (and thus I assume Fable 1 does, but I've not played that yet). Banshees are vengeful spirits that yell at you. The Shadows are more evil reflections of all the other variations of people that are seen in the game, and I know of no description in Fable 2 of whence the Shadows came, but it seems obvious the connection between the creatures and their shadow selves as "purer perversions".

The lone non-soylent exception I've managed to find in Fable 2 is the Troll. I have no idea what those are or why they are bad/evil, and they stick out like a sore thumb to me in what overall appears to be a well-woven mythology.

[1]Tolkien's work was basically homoerotic, racist, luddite, and rambling. Not that there is necessarily anything wrong with any of the individual elements other than racism, but as a combination there is rarely worse.
[2]Tolkien absolutely was a great world builder with a good sense of how geography and linguistics enhance and inform one another. I just think it is a shame that most of that world building is wasted on layers and layers of bad fairy tales and insipid war journalism.
[3]Shouting in the words of Charlton Heston: "Soylent green is people!" For those challenged by my use of the adjectival Futurama-based usage of soylent in the above sentence, allow me to paraphrase myself: The Fable universe is made of people.
[4]Never mind that such concepts hark back to the wonderful parts of human history when people thought that people with darker skin were bad and "lesser species" and pale and fair-skinned was blessed. As opposed to a wonderful genetic diversity of subtly co-evolved groups of one species where good/bad dualism is useless and ultimately ridiculous at the genetic level (there being more genetic difference between a human and chimpanzee (not even 2% total!) than between two human races).
[5]Maybe it is just me, but I chuckle every time I hear the word "balverine". It just sounds funny.