An excerpt from the Hollow Moon Nation Overview (compiled from Sharon's original notes):
OW Connection: humans and Bhuts from Sind
Arrival Date: ???
HM Location: north shores of Foecunditatis
1) They believe the same -- and rightly -- of the far shores of Foecunditatis, where many in the montane villages of yaks and goatherds are as human as you or I. Those of Vedal who are not, of course, prey upon those who are.
2) Deslandres and Vedal, Cynidicea and Qaurikka, and the albheldri islands of Haemus all have human populations;
3) Bhut : On Mystara, bhuts appear as humans by day, and scaly, clawed-and-fanged monsters by night; they have no control, conscious or otherwise, over this transformation. Upon coming to Matera, they gained a considerable bonus, in that lunar bhuts can voluntarily shift between their human and monstrous guises, at most times over the course of a month. Only at fulldark -- the 56-hour period of deepest darkness -- do bhuts involuntarily transform into their bestial state; conversely, only at skybright are they "stuck" in their innocuous human shapes. (Individual bhuts which are important NPCs may be given access to the PC4 lycanthropes' skill of Transformation, in order to resist these twice-a-month involuntary shapechanges. A good base for bhuts who are assigned the Transformation skill is 8, as even the strongest of their kind aren't all that good at resisting such changes.) During the remainder of each lunar "day", when it's neither too dark nor too bright, Materan bhuts may transform at will from one guise to another, whenever it suits their purposes. These voluntary changes take 6 rounds to execute... or perhaps less, with the PC4 Quick Change skill.
4) A single werebat entered the Hollow Moon by a remarkable coincidence in 862 AC, after being captured by Glantri's Prince Morphail. Its messy depredations in Glantri City had incited some awkward personal questions, compelling him to hunt it down; more amused than angered, once he realised he didn't have yet another renegade vampire to deal with, the prince offered the terrified creature to Alphaks as a gift, and Alphaks -- equally amused, as he was bored and it grovelled nicely -- plunked it down in the Hollow Moon with vague commands to cause trouble.
5) Mistress Ayvaer currently resides in an ornate pagoda in Vedal's second largest city, where her Cypri skin colour is easily mistaken for that of the locals -- at least, under lunar light -- and where her indifference to the city's omnipresent religious icons and wards against undead baffle those who hunt the spell-casting "vampires" which prey on hapless citizens.
6) Desdemonda is now well over 200 years old, and -- since several of the traditional ingredients of Alphatian "Potion of Longevity" formulas are unavailable on Matera -- has extended her lifespan using the late Volospin Aendyr's longevity-spell ... an ancient Alphatian ritual-magic which requires a living wolf's heart as a material component, and the secret of which she stole from Silverston before she fled the principality. However, the SoR interferes with the spell's youth-restoring functions; if not cloaked in an illusion, Mistress Ayvaer's human body is every bit as decrepit and hideous as her true age implies, and even her bat-form is bald and horribly wrinkled. Recently, she has hit on the notion that it's her lycanthropy which has caused the spell to fail in part, and is considering sending adventurers to the Toroldorsk forests with snares, to see if the heart of a living werewolf will be any more effective.... ;-D
7) Although there are exceptions -- the margasta are every bit as fanatical about mummifying their deceased as Nithians are, and the bhuts of Vedal don't tolerate the competition -- most HM natives have given up on their ancestral burial-customs or cremation practices, in favour of leaving the dead "to lie in state" in some isolated locale, and turning a blind eye to pisachas' comings and goings.
8) There's one more group of Materans who live in hiding among other humans, and change to animal-forms on occasion... but they're NOT victims/carriers of lycanthropy. They're living descendants of the original Alphatian and Flaemish clans -- Padfoot, Woodwarder, Bruin, and War-Tusk -- which carried the genetic shapeshifting trait that modern lycanthropy is a permutation of. When the lycanthropy-plague first broke out on Mystara in 401 BC, Koryis -- the Alphatian Immortal patron of peace, and a member of the Bruin clan in his own mortal life -- realised that it would mean the end for a peaceful existence of the shapeshifter-bloodlines: their abilities, once lauded, would be suspected and fears for as long as the plague's memory lingered.
Not wanting to see his former clan OR its counterparts driven to extinction by humans' blind terrors and hatreds, he discreetly rescued a few select members of each shapeshifter-family from the plague-fearing lynch mobs of the day, and -- since three of the four clans' animal-forms are active primarily at night, and he didn't want his own Bruin-clan to lose touch with the other three -- set them down in the Hollow Moon.
Koryis made sure to place the few shapeshifters he managed to save among HM cultures that weren't hostile to strangers, and in close enough proximity to each other so that they could meet, and maintain their own, Alphatian culture, among themselves. He also altered their body-chemistry slightly, so that HM shapeshifters (which were too few to sustain a viable gene pool, on their own) could intermarry with humans of Mystaran* descent, yet not lose their special powers. Instead, when a shapeshifter and a Materan native were wed, one child in each generation thereafter would be born with the Alphatian parent's gifts. Only if both parents are shapeshifters (of any type) will all children share the ability to transform; in marriages of "mixed" shapes, daughters inherit the mother's animal-form, and sons, the father's.
9) From Sind, originally. Remember how the Sindhis rose up and ousted all those evil shapechangers from power, that used to rule their nation? Most of the imposters could vanish into the population, but bhuts on Mystara don't actually control when they take on a monstrous form. Their kind always change at nightfall, which means that once their cover was blown, they were easy pickings for vengeful Sind heroes. While some fled to Hule, their patron Immortal Jammudharrah successfully perssuaded Ka that evil races had a right to be preserved from extinction too, so the last bhuts in Sind were brought to Matera -- an environment where the usual day/night boundaries are blurred, allowing them far more control over their forms -- along with a human food supply. Think Nepal, for culture.