this is a flashback to lee muhan's life, he's the spirit that's attached to mugo bcs he used to be in that body. he was the emperor's son or some shit and jaeheon was his uncle's prostitute and he ended up falling for him. idk if you'll get anything im saying but i hope it helps sorry
Before Mugo became who we know he was Lee Muhan, which is also why Lee Muhan spirit is attached to Mugo. Muhan was a nobleman's son back in the day. Jaeheon was Muhans/Mugos uncle's surrogate.
This is most likely a flashback to tell how he ended up in the big ass urn/pot and therefore how Muhan turned into Monster Mugo, Jerk Mugo and Sir Mugo (the old man Mugo). Like remember that Mugo was locked/kept in an urn/pot to turn into a god. That's why monster Mugo is always hungry (he starved in there) and Jerk Mugo is claustrophobic. This is giving more detail as to the how and why.
Right now I can't tell if it was pat Jaeheon's family or Muhan's family that tried to turn him into a god (or maybe I just don't remember)
I have no fucking clue what's happening in this story anymore the plot is so hard to follow