Eventually, I'll create a setting. But right now all I have are small notes here and there. So I might as well stick them here for others to critique. These notes (initially) won't have much in the way of order. I'll try to keep them in sections (Races, Magic, etc) but beyond that, there won't be any order to them.
There are two ways that a Teddy Bear comes into existence, the first is to guard a child (Type 1), and the other is to bind a soul into the Teddy Bear's body (Type 2).
All Teddy Bears, regardless of their type, contain the soul of a great hero. This means that most, but not all, Teddy Bears are Good.
Type 1 Teddy Bears are ALWAYS good. No ifs, no buts. They never seek to bring harm to the innocent, and are all steadfast destroyers of evil. Type 1 Teddy Bears are also more numerous than Type 2.
Type 2 Teddy Bears (AKA, The kind a PC will be) can be of any alignment. Depending on the soul bound.
Type 1 Teddy Bears come into existence when a great evil plagues a child, such as a terrible Dragon, a horde of pillagers or an Evil Knight demanding tribute. The child never consciously creates a Teddy Bear, and no sort of magical aura surrounds them. Whenever such a terror is inflicted on the child, they clutch their Teddy Bear very tightly, with the wish for protection resounding to all the afterlives.
Saddened by such an innocent life living in fear, the spirit and soul of a hero answers this wish, and possess the child's bear. The Hero who answers the wish is always a counter to the threat, in the prior examples, a Dragon slayer would answer the wishes of a child threatened by a Dragon, a child threatened by raiders would summon the soul of a great fighter or sorcerer who can take on entire platoons, while the Evil Knight would be countered by a Good Knight who will take the Evil Knight on in fair combat.
Type 2 Teddy Bears are all created by Wizards. Unless the soul is willing (Some are, but the majority of them are not) being trapped in a Teddy Bear is a cruel punishment. Good Teddy Bears are created by evil Wizards and vice versa, often to prevent the soul from being resurrected. The form of a Teddy Bear is used as it limits the ability the trapped soul has to influence its surroundings.
Sometimes, a Type 2 Teddy Bear escapes, and having no way to return to being dead, decides to adventure or take on mercenary work, depending on what it did in "life".
Default fluff associated with this variant. Humans of this variant can also be native to other planes.