i think the fortuneteller in question is doing this to show others what is right in front of them. albeit in extreme ways.
Tl;dr the magician/fortuneteller manifested their fears to show them what was right in front of them.
the girl might have felt she was invisible to her father because he never touched her. so the magician made her invisible.
the father worriedly searching for her showed he cared.
the half-elf fuu had a complex about the shape of her ears. shunned by both humans and elves feeling she didn't belong anywhere.
so the magician made her ears so long no one would find them pleasing.
yet people still cared for her and didn't shun her. showing that she is accepted here despite looking different.
the magician manifested their fears to show them the truth.
the girl feared her father didn't love her because he only used words to show his affection.
what was right in front of her was he still loved her.
fuu feared that her appearence prevented her from being accepted and she had no place to belong.
what was right in front of her was her appearance didn't matter. she was accepted and had a place to belong in Limbo