As for why NO does not lose memories:
Since Ravel's killing him -> lose memories, it cannot be the shadows explanation
Since I see no basis for traumatic death (the present incarnation has plenty of traumatic ways to die), that cannot be it.
It seems that any death, at all, would make him lose his memories. That is why there was the prophesy that in a few incarnations, he would no longer lose them, period. Otherwise, any and all deaths make him lose his memory. But the current incarnation has a mysterious decree that he will not lose memories. (In Hebrew, this would be called a stam gezeirah - a "just-because decree" - Hebrew has some fantastic vocabulary for dialectics!)
And what is so special about this incarnation? There isn't anything so special about it that he deserves this decree, as far as I can tell. Perhaps he is special insofar as prophetically he will be the one to end the whole cycle, but this seems weak.
I suspect it's a plot device - if dying made him lose memories, then we'd lose the wonderful novelty of a protagonist who can die and be revived, and we'd have a normal
RPG where die = reload game save.
But in such a beautiful plot, I regret having to invoke such a shoddy device - anyone have a better suggestion?
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As for why dying in the fortress --> permanent death:
Deionarra herself says that since the Fortress is in the Negative Material Plane, there is no one to die for him.
However, this is difficult because as someone pointed out, surely there is SOMEONE else living in the NMP. In fact, the githyanki ALL live there, no? So why can't a gith die for NO?
Also, the practical incarnation died in the Fortress, and yet the NO was resurrected just fine...? Why didn't that lead to Game Over?
Another difficulty: In conversation with TO, to scare him into merging with you, you must threaten to kill yourself with the special Blade of the Immortal from Coaxmetal. But why? If death in the Negative Material Plane, period, causes permanent death, why can't you threaten to kill yourself with a rock to the head?
Another difficulty: If Nameless One's dying in the NMP = permanent death, then the Transcendant One is off his rocker for trying to kill NO there! Rather, TO should transport NO out of the Fortress and then kill him, for in the conversation between NO and TO, TO says that he depends on NO's living, for the two have a link; TO does not want NO to die, but simply he wants NO to be far far away from NO, and without any memories. Were NO to die permanently, TO would die also, which is why one of the possible game endings is either killing yourself or threatening to kill yourself (which scares TO into merging). A game over for you is a game over for TO too.
This creates another difficulty: if you can scare TO by threatening your death, why is one option for you to engage in combat with TO? Surely TO knows that if he kills you in combat, he'll die too!
Perhaps TO (and his shadows in the Fortress) don't actually kill you, but rather put you on the brink of death (causing unconsciousness) where TO can transport you back to Sigil and kill you there? This would also solve the problem of why the Practical Incarnation's death didn't lead to permanent death. But this explanation does not seem to work, because dying in the Fortress --> Game Over. Since we know it is not by memory loss, it must be by permanent death.
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Another difficulty: We know NO no longer loses memories. But with each incarnation's death, his mind supposedly weakens. But is this not the very opposite of no longer losing memories? His mind seems to have gotten stronger, not weaker! We could say that retaining memories anymore is a just-because decree of this particular incarnation, and has nothing to do with the fact that NO's mental abilities are weaking notwithstanding his retention of memories. But we'd still have another difficulty: The Practical Incarnation was approximately 1000 years into reincarnating, and yet he had a VERY strong mind - NO's mind doesn't seem to be weakening at all! If 1,000 years weakens him to the point of Practical Incarnation, NO will have to go another 9,000 years before his mind will weaken appreciably!
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Another difficulty: With each incarnation, NO loses his memories, and thus also his Intelligence, Wisdom, and Charisma. But why Strength, Constitution, and Dexterity? These are physical attributes, not related to his mind!
At the beginning of the game, you can set these attributes as you see fit, and apparently they are not dependent on what NO naturally was (i.e. don't claim that you in reality setting the attributes of the first original Named One), because you can set his strength to be low, despite his imposing physique.
I suspect it is a plot device.