[Iroh will pause for a second. Not knowing about spirits was common, not knowing what they were was unusual]

Well, spirits are beings which occupy the spirit realm. Without proper guidance and training humans only typically enter the spirit realm after passing away for a time. Some spirits can be made as a result of unfinished business in this life. Think of it almost as a resonance of the soul left behind when the body is gone. Most spirits however, have existed for much longer than humans, and many are tied to certain locations. For instance there are many different spirits which serve as guardians of forests. They will not often be seen unless their forest home has been significantly impacted, such as having it burned down, in which case they will react violently.

[He coughs a little]

There is a lot more, but I won't expand on it unless you want me to.