My understanding is that a soul starts off like the souls in DBZ that wait in line at king yamas office. So they're a blank slate that becomes a human, then the human dies and becomes a shinigami/hollow. Then said shinigami/hollow becomes a little spirit guy again. The thing that confuses me is the whole royal family thing, like are humans royal in life then die and are sent to royal families that correlate with the human world or what? I'm pretty sure shinigami can mate but still the royal bloodline thing throws me off a little.