So Yordles aren't spirits; they're just hard to perceive. They are flesh and blood, but exist in weird ways. Yordles don't have to manifest around human ideals, but they can if they want; it's a matter of choice. Kled, Poppy and potentially Kennen are the most evident examples of this, while you have yordles like Teemo and Tristana who're seemingly not like that at all.
On the Lulu point, there's an easy explanation; Lulu found the Fae and the Glade far more interesting and inspiring to her, so she chose to manifest around their worldly views and beliefs as opposed to any human culture, becoming a rather peculiar little mage as a result. The ageing details a bit borked though I'll give you that.
Also yordles, being hard to perceive, can be and generally are all over the place. Poppy's lore actually makes reference to this, where she "revealed herself to Orlon". It wasn't that she was hiding from Orlon or the other humans, it was that, as a yordle, they couldn't perceive her until she manifested around the ideals she saw in them, and so they came to see her in the way she wanted to be seen by them.
Bandle City does exist, but humans can't really reach it without some insane magic. Beyond the scope of human perception doesn't mean it's physically intangible, just that it's something humans just wouldn't catch on to. To draw back to an example used before look at light, and how we as humans can percieve visible light but there's light beyond that we just can't pick up on with our eyes, but it still exists. We as humans have developed ways to detect and interact with it, but at the base level we can't. It's like that with yordles; they exist in odd ways which are hard for humans to percieve, but in this case the yordles can affect how they are perceived if they so choose to, and that perception can change depending on the person, since if a yordle's embodying ideals of a culture how a person views that ideal will change their perception of the yordle in question, and magic is a thing that also affects this; yordles are all innately magical after all. Poppy and Kled probably look different in some way to everyone they come across, and there aren't many people who really truly understand yordles. Thus far we've only seen two humans with that kind of insight: Illaoi and Ryze, and even they probably see yordles differently to how they actually are.
Also as a final point, it's not like yordles, despite being League's original race so to speak were a very "original race" to begin with, considering when they were introduced they were basically the gnomes/asura/insert diminutive engineer/scientist race here people of League. They were just fuzzier than normal. I feel like giving yordles this kind of nature as not easy to perceive, living in their own ways but still being enticed by human cultures beyond what their own offers gives some room for developments and new characters among yordles later down the road, since now yordles tend to reflect the nations they've come to associate themselves with (if they want to that is), so you can get unique yordles from all across Runeterra. Yordles always fell in to the trap of fantasy race = culture for League as is the case with many fantasy races but with this I feel like this opens up yordles to be more vibrant and varied, more like the humans they share the world with. Humans are always highly varied in the fantasy genre, but other races generally get pigeonholed in to a specific kind of culture and rarely deviate. Right now this isn't the case for yordles.
Long ramble is long and had a lot of the word percieve in it, so I'm gonna restock on my perception for now. Hopefully this made sense to somebody since I'm basically just going off conjecture at the moment and looking at what I see as a positive development for yordles as a concept; it's still really weird thinking about yordles in this way, but at least I can understand it. Maybe this helped someone else understand? Sod if I know.
