Nanaki’s grandfather, Bugenhagen, was an extremely knowledgeable person. Cosmo Canyon is a place devoted to learning about the Planet and life living on it. Bugenhagen has spent a large deal of time studying nature and listening to what the Planet has to say, so he filled Cloud and the group in.
Every living thing, every object, everything on the Planet is connected as energy. When something dies, its energy goes back to the planet, circulating through it until it ends up back in some other living thing. All of this energy forms a network called the lifestream. The lifestream gives live to everything, but it also gives life to the planet. If the lifestream is ever depleted, the planet will die, just like everything on it.
This is exactly what Shinra is doing. Mako reactors create electricity from the lifestream energy. Once that electricity is spent, there is no way for it to go back to the lifestream. With every mako reactor built, the Planet is dying faster. If there was every anything to strengthen the party’s resolve, it was this realization. Shinra needs to be stopped. Whatever Sephiroth is planning needs to be prevented. The Planet must be saved.
The caves are the site of an old battleground, where the Cosmo Canyon fought off the Gi tribe. They tried to use the caves to sneak into the town, but they were somehow stopped. Now their spirits haunt the caves, unable to return to the lifestream. The road through the caves was a perilous one, but eventually, the party managed to reach the end of it. This is where the undead leader of the Gi tribe attacked, Gi Natak.There’s something else that needs to be done first, though. Red XIII, or Nanaki, as he is truly called, needs to come to a realization. He is convinced his father died a coward, leaving his mother and him alone to fend for themselves. He has grown up resenting him. Bugenhagen is saddened by this, because he knows the real truth. To make the truth clear, he needs the party to follow him to the caves bellow Cosmo Canyon.
Of course, being undead, there was a simple way to deal with the creature. A single X-Potion defeated the spirit instantly. With the spirit out of the way, the passage to the outside was open and that’s where Nanaki could see the truth. Guarding the canyon was the petrified body of Seto, his father. He is no coward, he never was. He sacrificed himself to stop the Gi from advancing. His sacrifice is what saved Cosmo Canyon from certain doom.
Upon realizing this, Nanaki was filled with remorse for how he felt. He let out a long, sad howl as a sign of respect for his father. While he did this, the statue let out a stream of crystalized tears. The truth was now known and Nanaki could focus on what’s important – the salvation of the Planet.
It was now time to return to where the Sephiroth story started – to Nibelheim, Cloud and Tifa’s home town.