Are the souls of the dead used to fuel it's magic, sort of like a big pile of biological, decaying soul gems? If this is true, what happens if only a knucklebone or skull is used? Does that mean a piece of the soul is contributed? Does this prevent souls from returning to the dreamsleeve? Am I miles off?

How does this work? I'm imagining it like a giant enchantment minus the soul gems, but my understanding is admittedly poor.

I believe it must trap the souls in the fence or else they wouldn't be able to summon the ghosts of their ancestors.