Baldur’s Gate 3 is a story-rich, party-based RPG set in the universe of Dungeons & Dragons, where your choices shape a tale of fellowship and betrayal, survival and sacrifice, and the lure of absolute power. (Website)
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I suspect it's been cut. Either that, or it's just meant to be a sort of "yeah, Moonhaven was always kinda fucked, between the swamp hag, incognito Red Wizard and Underdark entrance right next to the water source, not exactly safe for children." :P
Maybe once upon a time they were part of some sidequest connected to Ethel, the Red Wizard or the invading Sharrans, or maybe it was just atmosphere, who knows. /shurg
If you read an old school diary shadowheart reads it like she's interested on knows something, but then its never followed up on.
!I think its supposed to be related to her past, but if it is its not super clear.!<
...Is one of the missing children's names
Because that would explain a lot.spoiler
Jenevelle Hallowleaf?
I don't think you see that name mentioned anywhere before that moment. But I couldve very well missed it.