How Regulators work.

[RedLolly]

Upon a person's death, the regulator detects the person is dead and attempts to pump in a stored blank soul to auto-revive them, but if it can't because there is no spare soul or the body is too old or otherwise damaged, it sends a message to all other regulators to block the memories of the dead person registered and uploads a copy of the dead person's memories to Living Memory.

The regulator and body are then collected and processed away. The extra souls are put back into the system for anyone to purchase and use and we are to assume the body's aether is also recycled (judging by how much dust is in the Underkeep) for general power usage.

If you aren't wearing a regulator, that erasure and upload step can't happen. People both remember you and you aren't "saved to the cloud." You return to the aetherial sea like nature intended.

Upon upload to Living Memory, the copied memory data includes everything that was and was not blocked, so you recall everyone you lived with and the system attempts to reconnect you with loved ones also in Living Memory.

Furthermore, the feral soul system forcefully injects corporeal aether of monsters into people, at the cost of damaging the aether of the person using it. More use causes more damage, and from what we know so far, the Arcadion's leaders are stealing the regulators of fighters as they enter late stages of the disease so that the population doesn't forget about them.

The DT Hildibrand series also shows the OPPOSITE is possible. Monsters can have the identity of a person injected into them. They are fully cognizant and have their memories from being human but fully erase any of the memories or mind of the monster. We don't know if it can be reversed if the old human body exists, and the experiments were done exclusively underground on criminals and the few we've seen so far have a good grasp on their monster abilities as well. It's likely not a pleasant process.

Regulators actually entirely prevent souls from returning to the Aetherial Sea on top of the entire system requiring even more soul aether to function.