The fact that the characters are played by marionettes is incorporated into the movie's fictional universe. That is, the characters are literally marionettes. Wide shots of the countryside reveal millions of strings stretching endlessly into the sky, each one representing an individual on earth. Nobody knows how far the strings reach or who is controlling them. As far as the characters know the strings are controlled by a higher power.
When a string attached to a moveable limb is severed, it is analogous to amputation; the individual loses the ability to use that body part. Once a string is cut nothing can repair it or bring back to life whatever it was attached to. If the "head string" is cut it results in permanent death.
Since nothing can reanimate a body part after its string is cut, repairs to injured individuals must be made using healthy, unsevered parts. An unfortunate collection of poor people and prisoners is kept as a donor class. When a person of royalty or other social importance loses a body part, another is involuntarily taken from a prisoner and replaced with its string intact.
Prisons are designed around the fact that the strings reach up endlessly into the sky. Rather than cells, the prisoners are confined underneath huge horizontal grids, and the range of mobility allowed by their strings is limited by small square openings in the grid through which the strings are inserted and locked within.
Instead of giving birth, a couple fashions a new child out of wood, and the "pregnant" wife begins to grow fine, silky strings on her own. At the end of the "pregnancy" the newborn strings detach from the mother's and fasten to the infant, miraculously endowing it with life.
Later it is also revealed that some people have discovered the ability to "leap" incredible distances and effectively fly for a short time; essentially this is analogous to the puppeteer jerking on the marionette's string and making it soar through the sky. It is only when the protagonist understands the unity of all living things, and the power of love, that he is able to acquire the skill.
James McAvoy: Hal (voice: English Version)
Catherine McCormack: Zita (voice: English Version)
Julian Glover: Kahro (voice: English Version)
Derek Jacobi: Nezo (voice: English Version)
Ian Hart: Ghrak (voice: English Version)
Claire Skinner: Jhinna (voice: English Version)
David Harewood: Erito (voice: English Version)
Samantha Bond: Eike (voice: English Version)
Jonas Karlsson: Hal (voice: Swedish Version)
Melinda Kinnaman: Zita (voice: Swedish Version)
Oliver Golding: Xath (voice: English version)