In its original conception, Darkon was the most "fantasy"-oriented domain in Ravenloft. I guess hip-hop is now canonical to the D&Dverse, but as ever the WotC's sense of humor errs on the side of lame: a hippity-hop does the hip-hop, you see. I am less convinced that the werehare needs to be a "rapper," but that's just me. Similarly, one performer is a werehare, but since those aren't yet statted out (and likely don't need to be) using the stats of a wererat will get you close enough. Although Isolde is an eladrin, it's suggested that we use the cambion statblock for her. One thing I like about the Carnival write-up, and Van Richten's Guide to Ravenloft overall, is how willing the design team is to use reskinning liberally. Note, though, that Silessa's entry does still suggest that she was a snake who was transformed into an elf, so some remnants of the Twisting remain. That bit is likely too attached to ableist tropes for 2021 Wizards of the Coast, although it would fit with the "body horror" tag that the Carnival supposedly exemplifies. (Although now it's just known as The Caller.) Gone, however, is "the Twisting," Isolde's power to forcibly remake anyone into a circus freak. Speaking of backstory, fans of the Carnival's previous incarnation may be pleased that it retains a connection to the mysterious villain known as the Gentleman Caller. I'd certainly use the Carnival in my games, though I would likely avoid going too much into the backstory. It's certainly not a deal-breaker, though. It feels like whoever wrote the Carnival section didn't quite get the memo. Additionally, the sword can at least temporarily leave the domain, which is generally not how the domain/Darklord set-up is supposed to work.
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Isolde's sentient sword Nepenthe is the actual Darklord, but the sword has no real backstory and doesn't seem to be tormented by the domain at all. Isolde is tormented by her role in the Carnival because it causes her to feel torn between conflicting loyalties and a desire for vengeance. This would work fine, except Isolde isn't the Darklord of the Carnival! You see, Darklords are trapped in their domains where they are tormented by their prior sins. I also think that the Carnival write-up is confused about how the rest of the book says Darklords in Ravenloft work. However, I do find the Carnival's backstory, particularly regarding its proprietor Isolde, a bit convoluted and overly long.
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It reminds me of the best parts of Carnivale and my own experiences on many a midway.
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Overall, I love the presentation of the Carnival.
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Since the Carnival can travel throughout the domains, it's a nifty way for your characters to get from place to place: just hitch a ride by running away with the circus. These fey merchants remind me a bit of Christina Rossetti's Goblin Market. The performers who travel as part of the Carnival are not generally ill-intentioned, but malignancy is always nearby in the form of fey merchants who arrive to sell their strange wares (and get up to god knows what else) alongside the Carnival. The Carnival differs from most Domains of Dread in that it is not a stationary place it is a sinister circus that can arrive anywhere in Ravenloft.