In the Secret Arcade Room in the manor, a note from the Karamari Hospital DLC, and the Spooky's Dollhouse DLC revealed the brief but understandable backstory of Spooky. Spooky started her life as a cute human girl who was insecure due to her cute appearance led her to be made fun of, especially during Halloween. She tried to wear her most frightening Halloween costume, but alas, she was still teased for being too cute
On one Halloween night, when she tried to scare someone with her Red Death costume from the tale The Masque of the Red Death from Edgar Allan Poe and some fireworks; her victim, later revealed to be her father who suffered from PTSD, unexpectedly shot her to death with a rifle. Her father incriminated a homeless man as his daughter's killer by placing the gun next to him. The mortally wounded Spooky was presumably brought to the Karamari Hospital, where she died there. Her father blamed himself for not preventing it from happening, as he could not bring himself to hate her "killer" due to the said killer suffered PTSD due to them being scarred and traumatized by an accident with fireworks in the past
Due to her violent death and being a misunderstood girl who was ridiculed due to her cute appearance, Spooky returned as a ghost to take her revenge so she and other ghosts who were ridiculed due to adorable looks can rise and terrorize the living so they won't be ridiculed anymore. For that, she somehow gathered many people, including scientists and workers, to build a maze of 1,000 rooms below a derelict mansion upon the hill that casts a blanket of darkness over a town, and fills the maze with various monsters that identified as Specimens. Afterward, people who aided Spooky either left or were killed by monsters inside
She then challenged an unspecified number of people to enter the labyrinth and survive various jumpscares and encounter with the monsters until they arrived at the 1000th room, but no one returned due to either being killed by the Specimens, or due to starvation and dehydration up until the protagonist arrived
In the game, Spooky appears every two hundred rooms, to congratulate the player on the way, getting more miffed that they are not dying yet, tricking the player at Floor 250 (playing a harmless prank) and Floor 750 (saying she's giving the player infinite stamina, but instead disables sprinting)
In the final room (being Room 1,000), the player finds themselves in a peaceful field, leading the player to think they have survived the horrors of the mansion. However, the "sky" soon crashes as Spooky appears before the player, looking rather irritated that the protagonist managed to live. However, as Spooky is talking, Specimen 9 bellows out an angry roar, which cheers up the ghost, stating that the player needs to do one more thing before they can leave, being to beat a transformed Specimen 9
The final boss can result in two different endings. If the player uses the axe too much in the game (even if when using it for Specimen 9's Boss form, for example), they will get the bad ending. The playable character repeatedly chops away at the beast, the screen getting more of a red tint with each swing. After this, Spooky then appears, both in congratulation and to say it was interesting to see them swing their weapon with reckless abandon. She then says she thinks they'll make a great example of a Specimen. After this, the protagonist is then shown dragging their axe behind them, as the screen reads "Bad Ending
However, if the protagonist uses their weapon sparingly against Specimens and the boss, they are able to get the Good Ending. If they are to get said Good Ending, the roof collapses on both the hero and the beast. After this sudden event, Spooky suddenly appears once more, claiming that the protagonist died and became a ghost, due to their tragic death. After revealing this, both of them float above the floor, which reveals a ledge over a large number of ghosts in a large room. Spooky appears on a large screen in the center of the room, stating that her collection of specters now has the proper amount to execute her true plan, to lead an army on a quest to stop the fact people think ghosts are cute. After this, the game ends
