In a way, the Shimmer feels like it changes many items into their older, or more primordial forms. For example, decrafting items, taking items and empowering them, (IE Clentaminator/Terraformer, RoD/RoH), or bricks or armour into their ancient forms.
I don't know how the Terraformer/RoH/Bottomless Shimmer Bucket being locked behind Moon Lord fits into this explanation, or how this would explain items changing to their counterparts. (Magma Stone/Lava Charm, etc.)
A co-existing explanation to make sense objects turning into Aether counterparts would be them just being infused with Shimmer in an attempt to revert form.
This could also mean that Faelings are the souls of critters, as they revert to their true form when falling into Shimmer.
With NPC's, it turns them into their true forms, like the mechanic as a goblin, or the pirate as a ghost, but feel free to poke as many holes into this theory as you want.