The official GemStone IV encyclopedia.
The fenghai seems to be a furry little ball with feet. Sparkling eyes peer out from a mop of russet fur, looking about with a happy curiousity. Stubby arms end in pudgy little hands that appear dextrous despite their dimensions, and the round-toed feet are covered in hair and dirt. While comical in appearance, it is obvious that the furball can take care of itself.
Fenghai are immune to non-magical weapons. They sometimes glow brightly, gaining a +69 TD boost.
They jump up and down in triumph when they kill you, and poke at your body, but otherwise do nothing interesting. They reside in the Warrens, which by implication is a breeding grounds, and they have a gaudy love nest. Their name is unusual in that it seems to be a reference unrelated to their creature description, though the word parts might simply be meant to translate as "a lot of laughs". In this context it is notable that the Warrens contains, like The Broken Lands and The Graveyard, giant mushrooms and glowing green moss as a lighting mechanism. They have some unknown religion involving rock glyphs, including depictions of a tree and the sun, and possess what appears to be a demon skull.
Behind the Scenes
In context the fenghai might be an allusion to Native American "little people" myths, where small furry creatures (nature spirits) would live in caves near the Great Lakes and made the ancient petroglyphs (rock art) using their own blood. They were mischievous. The fenghai culture is depicted as stone age. Thematically this is reminiscent of Shadow Valley, which has Native American and faerie folklore subtexts.
However, they are even more likely to be an esoteric allusion to the "little people" of Margaret Murray's "witch-cult" hypothesis, which was incorporated by Lovecraft Circle authors. Murray had taken the faerie folklore around Glastonbury and Arthurian legend, and inspired by Frazer's "The Golden Bough", argued there was a surviving pagan fertility witch-cult centered around a horned god (such as Cernunnos or Herne the Hunter). The faeries were taken to be a Stone Age race of tiny humanoids that still exist underground on the edges of civilization.
Jessie Weston was an Arthurian scholar who dismissed Murray as a crank, but herself used Frazer's Diana fertility religion anthropology to make a highly speculative argument regarding Arthurian legend, making much of the Wasteland mythology which was used for Terate as Perceval in the Vvrael quest. She notably used a fertility initiation rites argument for relating the Chapel Perilous to St. Patrick's Purgatory, which seems relevant to the symbolism of Castle Anwyn. These would serve to explain the fenghai being portrayed with emphasis on their breeding caves.