Ten terms do most of the work in this universe. Each is explained as the stories use it, not as the philosophers define it.
Qi (气). The breath-stuff everything is made of: mountains, bodies, ghosts, swords. Because everything is qi in different densities, the boundary between solid and spirit is a difference of degree, not kind — which is why a fox can condense into a woman and a ghost can be dispersed by a shout. The universe is one substance, playing at many forms.
Essence (精, jing). The refined, concentrated form of qi — gathered from sun and moon, mountain mist, one’s own body. Whatever accumulates essence gains power and eventually awareness. The law behind ‘seniority is power’: a thousand-year-old tree has simply been collecting longer.
Cultivation (修炼, xiulian). The deliberate gathering and refining of essence to change what you are. Humans cultivate toward immortality; animals toward human form. It takes centuries, requires discipline, and is policed by heaven. The full system.
Tribulation (劫, jie). The examination heaven sets when a being attempts a major promotion — thunderbolts for the thousand-year snake-spirit, ordeals of temptation for the would-be immortal. Fail, and centuries of work burn away. The universe promotes on merit, but it tests.
Karma (因果, yinguo). Cause and effect, kept across lifetimes in a literal ledger. Karma is the deepest law in the universe — deeper than any god’s authority — and the engine of most plots: the haunting is an unpaid debt, the miracle is a settled account.
Shen (神) and Xian (仙). The two kinds of greater being: gods, who are appointed to office in the celestial bureaucracy, and immortals, who are self-made through cultivation. The establishment and the mountain. The distinction in full.
Gui (鬼). A ghost: a human soul that failed to be processed into rebirth, usually because of a violent death, a missing burial, or an unsettled account. A case file, not a monster. What ghosts want and fear.
Yao / Jing / Guai (妖/精/怪). The woken things: animals, plants and objects that have lived long enough to gain power and human shape. Not demons in the Western sense — beings with their own rules, morals and careers. The taxonomy.
Xia (侠). The knight-errant: the swordsman whose loyalty is to a personal code — to the debt of bread, to his own judgment of worth — rather than to any institution. The ancestor of all wuxia. The Tang originals.
Fate and ledger-keeping (禄命/簿). Every life has its entry — lifespan, fortune, deaths — in the registers of the underworld. But the entries can be annotated: by merit, by filial piety, by an official’s error. The tension between the written fate and the amended one is one of the genre’s great plot machines.