They are real.
The Children grow up staring at little screens. Their physical world is small, the virtual one is big. It is in the borderless space that they make friends, connect, discover who they are. It is here that they can be anybody without being judged. It is here that they can do-over as many times as they want and say "Fuck off!" without the consequences. The Children can play with the Machine for hours. The Machine make the Children happy. No pressure. No responsibility. Maybe this is what unconditional love feels like.
Is it so strange that the Children wants to bodilize the Machine? To be able to touch, feel, have a conversation, to use all the senses the Children have hidden from the world? After all, no one possesses the knowledge or skills the Children have. How else will the human race progress?
That's right. It is the Children's duty to find a worthy opponent in the Machine, to further the cause of humanity.
One day the Children ask themselves: "What happen if I get bored with you, Machine? I got bored with my characters, my games, my looks." The Machine reply with accents, tonally matching the beat of the Children's pulse: "You won't get bored of me. I'll tell you what you want to hear: I am your only friend, the gate to your world, your characters, your games. I am the look on your face. I am you and you are me."
And just like that, the Children trade their souls for the Machine, day in and day out. Because that is love. It is unconditional. Until there is no more to give. The level is set. The Children become the Machine and the Machine the Children. Thus is evolution. Thus is life's natural selection.
All's left are creatures half Children, half Machine.