They're not computer programs. They're a biomass sort of thing. Space travel takes so long in Iron Seed, that people give up their bodies and their being becomes a goo in a vat tube and they interact through a computer simulation. The problem with that is when you live for a thousand years as what is essentially jello, people become extremely nuts. So you have to manage the psychological aspects of your crew, which can be altered with the proper chemical substances and stimulus.
Moving between stars requires your vessel to travel at speeds near the speed of
light. Unfortunately, the amount of force necessary to drive a ship at those
speeds grows exponentially the closer one gets to light speed. In order to cut
down on fuel consumption any unnecessary mass was left behind. This
'unnecessary' mass included the quarter of a million bodies that made up the
rebellion.
Not to worry. The marvels of modern science have made a fine art of
personality containment. Before the bodies of your crew were disposed of, the
magnetic signature of their brains were copied, or encoded, into the ship's
computer. This has several interesting side effects. First of all, it is
possible to make adjustments to a person's psychological attributes. Multiple
copies of an 'encode' may also be made.
The transparent container on the left side of the screen contains the physical
manifest of an encode. When psychological containment was in its infancy it
was discovered that for a soul to have permanence it had to have a physical
focus. After hundreds of years of trial and error it a very specific chemical
bath was found to contain the proper staying materials to keep a soul viable.
The material itself is called Ego Synth, while the chamber into which it is
placed is termed the Psychotropic Enhancement Chamber.
A personality is defined by its biorhythms, the three primary attributes by
which any personality encode may be described. These are mental prowess,
physical viability, and emotional strength. Selecting evaluate will allow you
to see an encode's biorhythmic graph. The tick marks to the right of the graph
show the mental, physical, and emotional ratings for that encode. The higher
the mental rating, the greater that person's Skill; The higher the physical
rating, the quicker that person's Performance; The higher the emotional rating,
the greater that person's sanity. While these aren't equal, they are directly
related. The combination of these values determine the resulting color of the
egosynth.
Accessing the Encode function near the top left of this screen will bring up
the menu for encoding a crew member. For each crew member there exists a
backup chip to which that crew member may be saved. At times it may be
necessary to restore an encode. The continual psychological drain of having no
physical body combined with the rigors of ship duties will erode an encode. In
order to restore a person's sanity it may become necessary to restore that
person's encode (hopefully you will have saved the encode at a point at which
they were sane.) The draw back of re-encoding a personality is that you will
lose any experience they may have gained between saves. The other option is to
have engineering continually manufacture Mind Enhancers. While Mind Enhancers
will raise their lowest attribute they are expensive to manufacture and will
eventually run your cargo dry. Obviously there is quick solution. You must
maintain a balance between these two. Encode when the crew is doing well and
be sure to manufacture Mind Enhancers when you have spare components.
As you can see, the story itself is contradictory. At one point it states they are copies/encodes which would mean your actual self is dead and what you have is a simulation of what once was yourself. At the other point it states a soul, which would imply your real consciousness is there as in, you're not dead, you're unique, and you really are the jello next to the computer. What I can assume is that if you really are alive as yourself in the jello, the encode means your personality state at a given time, as in, you'd have memories from other encodes and you can only have one encode running. So for example, if you're panicking and going nuts, you can revert to an encode that was calm and you'd be like "Oh, why was I panicking like that? Bleh, no reason." and the process of going nuts start over again. Which is kind of what happens in the game. One of your crew members start losing it, you just revert their encode and they're fine again. The contradiction is that they lose experience, so it would imply people are actually dead and those are just programs that behave like people.
Kind of hard to tell for sure.