Firstly memories are themselves a type of aether, the immaterial sort as per Mikoto's explanation in the Ivalice raids. Such aether, without a vessel, naturally disperses back into the aethereal sea, where they are broken down into their constituent bits. The actual content of the memories isn't important to the aethereal sea.

As for Otis, he was part of the experiments to create Endless true, but something you should remember is that memories can be copied. That's part of how soulstones work. They contain the memories of techniques, but the people who made those techniques still kept the memories with themselves as well. The Meso Terminal is, in essence, a very big, complex soulstone, containing the memories of those wearing regulators.