At first, Matilda refers to the protagonist of Mr. Watts’s story as “Mr. Watts’s Pip,” who like Dickens’s Pip was an orphan, though this Pip was brought up in New Zealand. Later, she simply refers to him as Mr. Watts. In any case, Mr. Watts lived with a woman who died when he was 18 and gave him her house, which he turned into two units and rented out to Grace, who was attending dental school. Over time, he became enamored of Grace, and eventually they fell in love and bore a child named Elizabeth. Mr. Watts told his audience that he was shocked to see his parents’ faces in his daughter, though he hadn’t known what they looked like. Still, he could detect their features as they mingled with Grace’s darker traits. “Between us, me and Grace had created a new world.”
When Mr. Watts says that he and Grace made “a new world” by having Elizabeth, he touches once again on the idea of combining two cultures. Having caught a glimpse of his lost parents’ features in his daughter, he regains part of his own history while simultaneously “creat[ing]” this new life with Grace and his daughter.