By the time Plushee woke up, Hou was kinda dead-ish/dormant? basically in slumber. But the message was made clear that they needed to somehow take out the other bugs and reform the soul.
Taking on what was Hou's initial duty of sealing Vetis away after every Halloween.
At some point, the soul split up so much to a point where the main Hou couldn't keep himself stable. So with his last bit of energy, he crafted Plushee out of his silk, wrote a prayer on one of Vetis' curse tags and transferred half his remaining soul fragment into the doll.
