I think I understand Illaoi's test
Illaoi's quotes seem to imply that Nagakaborous gave people their souls, and is in some way (or entirely) a part of everyone. "You speak of having a soul. It was never yours. None of them were." "I do not walk alone. I am with my god. It is here." Now whether her god actually gave souls, I don't know, but it's clear Nagakaborous is a deity that either gives people their life energy or at least directs its flow.
"You are the tiniest sliver of energy held briefly in shape. Where this energy flows is your destiny." This quote supports the providing energy theory, since it is up to people to decide how they use their energy. Nagakaborous doesn't care how your energy is used as long as its used. Most of Illaoi's quotes are about motion, flow, and how stagnation and inaction is a bad thing that offends her god.
Also, remember, "Nagakaborous surrounds us. All is Nagakaborous." "It is the storm that is life!" I'm sure there are more quotes to support this, but I feel that Nagakaborous is also this energy that moves through people. Though it obviously has a will, it's a will that is mostly benign until something offends it with either stagnation or an abomination of its intention (undead, the shadow isles).
So, to the test! If Nagakaborous has some part in providing or directing the energy within people, that means when Illaoi pulls the soul out of people and they become vessels, the tentacles that they're fighting are part of the same energy that they're made of. Essentially, they are fighting themselves. Beyond that, the actual literal thing that's happening is that Illaoi is pulling their soul back into the vortex, the tempest, Nagakaborous, that it came out of. "Change, or you will be pulled down." "Your soul drowns. Fight." "Each of your lives has served the vortex." "Give up, and your life is nothing."
This test is intense. It's literally tentacles of spirit energy (possibly your own spirit's energy) lashing out at you and you desperately struggle to survive. Illaoi doesn't insult those who just run away. After all, a coward is in motion. Fear is natural, though she does say life is too short for fear. That fear might lead to your death, but at least you died in motion.
But Illaoi and Nagakaborous don't want you to die! They want you to struggle. They want you to earn your place in the chaos of it all and drive yourself toward the purpose you make for yourself. "I don't want you to fail, I want you to learn." "To challenge, to fight...this pleases Nagakaborous." "Keep going, keep striving. This is our way." And, if you succeed: "You swim well." "You are in motion." "Nagakaborous accepts your tithe."
Your tithe, your payment, the deal that's inherently made for you to live your life in the League world? You have to be willing to fight for it, or else Nagakaborous doesn't feel like you deserve the life you've been given.
. After all their favourite music genre ought to be soul...