Yesterday upon the stair
I met a man who wasn't there.
He wasn't there again today.
Oh, how I wish he'd go away.
Ever met someone in a dream who was both there and not? Those were these people. The interfae exist only as interference patterns of identity that occur when two dreamscapes brush against each other. The fact that they have a continuous species at all is due to the fact that, while they exist, they manipulate the dreams they inhabit with the goals of ensuring that all participating dreamscapes have a future tendency to touch other dreamscapes again, in whatever manner gives rise to an interfae. The same interfae exists whenever the same set of people, usually a pair, touch dreamscapes, and only communication with an interfae during such a conjunction can access any memories of prior existences. It's therefore possible to have hosted more than one interfae in your life, and in fact theoretically -- with the right manipulation -- you potentially hold as many interfae as there are sets of other dreamers in the multiverse.
This tenuous hold on existence means that an interfae is neither alive nor really dead in between its moments in dreams. They're probably outsiders -- certainly no one has seen the soul of anything like an interfae in the Outer Planes. (Indeed, given their vanishing rarity and the difficulty of communicating with them, almost no one even knows the species exist. Naturally, being some sort of magical or psionic manipulator, some of those who do know regard them as parasites or a disease to be cured.) Perhaps they simply never exist again. The interfae themselves, asked about the matter, have an extremely vague religion about it which sounds mostly like wishful thinking: that perhaps when their hosts die and become outsiders who no longer sleep, their lost dreamscapes becomes a ground state where the interfae can exist eternally itself.
The Orb of Day and Night is probably a Platonic sphere. In Arcadia, the Platonic shapes are not so much idealized -- they're ideal in Mechanus -- as, so to speak, tainted with good. In this case, I'd say they're applied, i.e. put to good use, so that things that approach a Platonic form in Arcadia are able to be aided by the natural shape of events there.
I guess the better question on this tangent (hope no one minds that a threadjacking has occurred), is how would a DM present such a skewered reality? How does one handle existant/non-existant beings such as "Scheodinger cats" (or men or orcs or whatever) to the PCs?
I can only imagine it in the same way as one would describe something we see out of the corner of our eye (except that in this case the PC might be looking directly at him).
Maybe the trick would be inverse concentration, if the PC does a broad glance across a bar, he would see an assortment of patron and staff; but when he focuses on a serving wench (in order to get her attention), she suddenly ceases to exist and for all intensive purposes, it will be as though she never existed.
But the moment the PC thinks about something else, she suddenly reappears and serves him his drink (which he would have ordered if she had always existed).
Such an arrangement could be very frustrating if tracking down a thief that has stolen your money. If the PCs start chasing him, he disappears. But if they forget about him, he reappears. (DMs choice about whether the PCs get to keep their money or if it disappears with the disappearances/reappearnces of the thief)
I'd also include some absurdly fanciful things (e.g. a golem made of gingerbread ready to attack with its fire-breath) but the moment the PCs draw weapons and focus on it, it ceases to be (and others will think the PCs are crazy to suggest that such a thing ever existed); but then once they stop thinking about it, it reappears and hits them. Then they refocus on it and it disappears; then it later reappears with the damage it would have suffered if it had always existed and had fought the PCs
It gets confusing, but for a brief sortie, it could be fun to mess with the players this way
Maybe a visiting Xaositect would get an advantage to have absurd but beneficial things exist for him while a more lawful mind (who couldn't help but focus on the "concrete reality") could never keep things the way she wanted
I had a brief comedy adventure where the PCs jumped around a number of bizzarre demiplanes where such a set-up would have fit right in.
I did include a Demiplane of Meta-Reference.
Everything in this demiplane had an arrow hovering over them that labelled them "fighter", "mage", "doppleganger posing as a cleric", etc. If they looked more closely at anyone or anything, more arrows would appear ("helmet", "sword", "bad teeth", etc.) and the more they focused on anything the more arrows and details they would see ("enamel", "cavity", "bit of spinach", etc.) And if the PCs looked at the descriptive arrows closely, they saw another arrow with the words "descriptive arrow" pointing to the first arrow (and itself)
I didn't have them stay too long in these absurd demiplanes but the brief visits were enjoyable.