In my universe, wisps are a collage of the souls of various animals, bugs, critters in general, a bundle of life force that becomes more aware, more intelligent, and more powerful with more souls.

The more ancient and sacred a piece of land is, the stronger the wisps become, they may be more colors than just yellow, they may inflict debunks to your mind and you charisma, and drain sanity.

Wisps can get to a point where they get so aware, they actualize using the clay of the land and grow flesh, this is how races like Dwarves come to be.