This is one in a series of books which introduce children to the alphabet and help them take their first steps in reading and writing. Each Letterland character helps children with the sound and the shape of the letter as the child follows their adventures.
So this is two stories in one. The first one children use Impy's blood(?) to write with????? Like they know that he's a sentient being but sure okay whatever just dip into his open head I guess. The second one this captain has never heard of letterland but doesn't even raise an eyebrow at this half letter half man being in front of him?? Like no, get him to a hospital or a freak show.