I suppose this could also be up for 'critique' if you want, but at this point the concept is impossible to unzip from the setting and its stories, so it's not getting changed. I'm mostly looking for 'unexpected consequences' of such a reality.
As far as background goes: in my Midara (named for a genus of moths, symbolism that doesn't really matter here) setting, the cosmology is based heavily on the concept of Animism. That's the easy part, nothing special to see there.
It gets tricky when it's possible and relatively common for spirits to cross-breed with humans and other animals. Or plants. Or basically anything else organic. I've put a lot of thought into what a world like this could look like, and I'd like to share it to see if your ideas take the concept in other directions, or I'm missing obvious stuff.
Spirits– Midara is an animistic world, where every living (and the vast majority of not living) things have at least some spiritual presence. Every rock, every blade of grass, every drop of water. The vast majority of these spirits are no more remarkable than the physical elements they're connected to. The spirit of a raindrop is fleeting, ephemeral, less individually meaningful than a mayfly. The spirit of a river can be vast, ancient, and powerful beyond mortal comprehension. Both, by definition, remain water spirits… but that's almost the only thing they'll share in common.
Mages and Bloodlines– Corporeal beings with magic, including many nonsapient beasts, are the product of spirits "breeding" with living things. First-generation hybrids are highly mutable and difficult to anticipate; as almost spirit can breed with almost any living thing, the possible combinations are bordering upon the infinite. The only sure things is that the hybrid will in physical form resemble the corporeal parent (which is the mother in the case of most animals), but may have such traits as extra limbs, wings, or other body parts… and their Magical Affinity will be identical to the spirit parent. Hybrids tend to be sapient if either parent is sapient.
The power of the spirit parent also mattes; weak spirits may not even have a notable impact of their offspring, leaving hybrids with minor changes and traits, while the strongest can sire demigods.
Things get even more messy when it turns out that most hybrids retain their spirit parent's ability to breed with just about any living thing, producing an endless array of chimera, gryphons, manticore, centaurs, and the like. Many bawdy jokes and tavern songs exist speculating upon the "mechanical difficulties" of certain couplings.
Magical blood would dilute in the gene pool until it reaches a stable, weak, point (basing this theory on how natural hybrid species in our world turn out- many are sterile, but even the viable ones tend to have reproductive difficulties. This would probably result in odd features- the most common being unusual eye, hair and skin color. Altered eye or ear shapes, unusual body hair, maybe tails, claws, and on rare occasion wings finding their way into the bloodline, creating a vast array of peoples… but those people are still descendant of humans, along with some long forgotten blend of spirits. Not that "is also human" has ever stopped our species from deciding other people don't count as people based on all sorts of arbitrary bullshit reasons. War ain't going to change just because a new phenotype includes pointy ears.
I can also imagine that in order to ensure their magical bloodlines, many of the upper class go out of their way to court spirit favors, in hopes of being gifted with a hybrid child. This lets the powerful remain powerful is… there is just no escaping the shackles of power and politics with our species… In any case, the upper class wants to remain the upper class, and so they will hoard power. In this setting, that power relies heavily upon actual genetic heritage rather than imagined, so expect upper class eugenics projects that rival Crusader Kings 2.
That said, genetic surprises aren't unheard of, and sometimes long-dormant magical lines can blend together in just the right combination of alleles to produce incredibly powerful people with no direct source of magical blood. As well as gifted spirit-hybrids with a commoner mother. In public, they'd be champions of the people… in the private halls of the old blood, derided as "mud heroes".
Monsters In any case, wealthy and poor alike have to worry about the uncontrolled wilderness. Animals and plants, and the spirits which "mate" with them, vastly outnumber humans… so while the rules for bloodlines are little different for them than for humanity, the sheer overwhelming numbers place humans at a disadvantage, fighting a ceaseless war with the nature simply for survival.
If a Mud Hero can turn back the tide, drive back even a single dragon and in doing so save thousands of lives, then the nobility can simply grant them a title in a stretch of wilderness. I don't know much about lordly title bequeathing, but I'm willing to bet they're more than willing to give away land that's otherwise crawling with monsters to the people who can civilize the territory (I'm calling them "Reclaimers" in my story). Meanwhile, the scattered enclaves of human civilization remain cowering behind magically augmented walls, and even the powerful hesitate to traverse the wilds.
Fairies– An entire ecosystem of pixie-type creatures could, the ultimate evolution of spirits breeding with flowing plants and hive insects. Somehow it came to be amongst most fey that the females are flying insect-creatures descendant mostly from bees (hive species tend to have female workers), while the males are mostly from flowering plants (which are mostly hermaphroditic, but still). Somehow, the genetics work because magic.
Ancestral Gods– These beings are 'genius loci' spirits, and exceedingly powerful ones at that. Nigh immortal, these spirit-gods are the living will of large stretches of territory. Ancestral gods can have tens of thousands of people living within their domains, who worship them. They are offered prayer, because they will hear. They are shown loyalty, because they will remember. Sometimes, they are even true ancestors of many in the villages and cities that line their bodies.
They'd also share a symbiotic relationship with their worshipers- the magical energies generated from prayer are individually minuscule, but enough matches can burn as bright as any bonfire. In turn, the spirits (especially water and earth spirits, the most popular Ancestral gods) can drive off monsters, serve as dispensers of knowledge and magical blessings (and sometimes a fortunate family will receive a demigod child), and ensure peace between city-states. Even a culture not caught up on ancestor worship (a common animist practice) and respect of elders (it's hard to get more elder than a river or mountain), it's not a good idea to piss something off that can kill everything you've ever loved in an eyeblink. Conflict between cities that worship the same Ancestral god are handled with diplomats, lawyers, and priests. War is for outsiders. Even Ancestral Land spirits are finite, so there will always be outsiders.
In any case, that's what I've puzzled together as possible consequences of such a universe. I'd love to hear your ideas for more. And it doesn't have to be the specific trappings of Midara's rules, this could easily apply to any number of fantasy settings in its own way.