Arabus is a malevolent Cloud Demon whose intention is to devour everyone's shadows to give him strength. He met Knight Shade in the village grayvale one day, and promised he will boost his career and make him a star. Arabus indeed drew almost the entire village to Knight Shade's next concert, stealing all their shadows, including that of Knight Shade's mother, and used them to turn himself into a powerful cloud of magic.
Since then, Knight Shade has toured to increasing success, stealing ever more shadows for Arabus, hoping to keep his own shadow long enough to figure out a way to stop Arabus. While hunting for shadows, Arabus calls to Megan to come out of hiding, and she steps up, announcing that she has a surprise for him. A vast army of Flutter Ponies, brought by Molly and Lofty, fills the skies, circling Arabus and blasting him with their Utter Flutter.
Unable to withstand the onslaught, Arabus grows smaller and smaller, and the shadows he contains fly out, seeking their original owners, both he and Zeb were place in prison.