The Milfanito are beings created long ago by the Great Dead One. They have little concept of self and live only to sing. The Great Dead One taught them song, and that their singing grants comfort to those who are cursed with the Darksign (“bear death and Dark within themselves”). They have sung ever since they were taught and will sing eternally for those afflicted. When they sing the little brightbugs found in the marshlands leading to the Undead Crypt ‘dance’ or flutter about and this pacifies the Undead Lizard Men in the area. These undead have spent so long in the water that they have adapted into lizard like creatures, indicating the brightbugs can keep them entranced endlessly. These brightbugs were born from (ie. created by) the Great Dead One. The Milfanito live only to sing, and will continue singing until they can do so no longer.
Because the Milfanito and Fenito were both created with express purposes to comfort the Undead, and because their names end with ‘nito’ it is often presumed that the “Great Dead One” and the One who gave us the first death are references to Gravelord Nito from Dark Souls 1, or what is most probably (because we do not encounter Milfanito or Fenito in Dark Souls 1 and we know that during these events Nito dies for good) an incarnation of his soul, prior to the Rotten. Perhaps this incarnation was the eponymous “Amana”? We know that the Rotten embraces all in his sanctuary for all things unwanted or tossed away and that Gravelord Nito expended much of the energy of his Lord Soul on death, bringing eternal rest to the undying. This would seem to indicate a benevolence towards the Undead, who are creatures both unwanted and undying. The creation of beings whose sole purpose is to bring comfort to the Undead therefore seems to align with that benevolence.
Consider the following references:
“Gravelord Nito, First of the Dead” – Lord Soul description – First of the dead may imply he was ranked first or the first to die. Because of the Old Dead One Soul it seems to confirm that he was the first to ‘die’.
“Old Dead One Soul” – Reincarnated Lord Soul description – Implies that Gravelord Nito was ‘dead’ (or in that case, ‘undead’)
“Great Dead One” – Milfanito description – swaps out Great or Old, both true descriptors of Nito.
“The One who gave us the first death” – Fenito and Darkdrift description - First of the Dead and the one who gave us the first death could mean the same thing, if the First of the Dead means that they were the first to die then this would again reference Nito.
The Milfanito live in the Shrine of Amana (the marshlands leading to the Undead Crypt) and “will never leave”. Of the 4 Milfanito in game, we encounter 3 at the Shrine. The final Milfanito in the Drangleic Castle tower is clearly being held against her will. The true nature of the Milfanito is mysterious. They appear to be humans, and there are clear indications that they are undead or at least eternal. It seems possible if not probable that their life force is tied to the Rise of the Dead and perhaps this is why they cannot leave the area. The Rise of the Dead is a shrine that restores the humanity of those without any. The Milfanito are constantly human in appearance, yet hold no effigies. There is a Milfanito singing at the shrine and the entrance can only be used by one who is Undead, implying that she must have been Undead to gain access. It may be that the ‘hollowed’ looking Milfanito we encounter prior to the Demon of Song boss fight is the same Milfanito we encounter next to the Rise of the Dead shrine, after being restored to her human form. Milfanito appear to go hollow if they cannot sing. The same fate befalls both the Milfanito beside the Demon of Song whose song may have been ‘stolen’ by the Demon of Song and the Milfanito trapped in the tower who can only sing once she is freed. Her appearance is regular, but this can be explained by the Ring of the Dead which she drops, a ring that gives human appearance even when hollow.
The Milfanito’s purpose to sing, is as we are told, a way to comfort the Undead, but there may also be another aspect to it. The Milfanito’s position on the way to the Undead Crypt allows them to pacify the Undead and in a sense enchant them. We know that the Undead are drawn to the song of the Milfanito, because if they weren’t the Demon of Song would not have learned to sing to lure travellers in. Therefore, the Shrine of Amana may in fact be a place of preparation for the Undead Crypt. Those who enter it are pacified, and if judged worthy in their reverence, will be buried alongside those who have come before by the Fenito.