The reason why their Concept Manip is Type 1 and not 2 is because the concepts Arceus and the other PokeGods embody is before the counterpart of the multiverse, and thus not relying on the multiverse to exist.
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"The way I see it, our world began when the spirit within people was born.When that spirit came to be, there followed awareness about the world."
This is strange how did Arceus exist before the space-time was created if he was born within the spirit of people to begin with ? Unless the statement was referring to something else in the context?