When Mr. Revise
came up with his vision to rid the Mundane world of magic, he had apparent success--in his own words, it was he who drove the werewolves, vampires, and other creatures away into obscurity. However, his plans hit a snag when Fables
started to flee the Homelands
en masse to get away from the Adversary
. Fables were unique in that they couldn't simply be killed because the need to have their stories would create a new version of that Fable somewhere else. Instead, he created a device that would brain wash the Fables, allowing for Mr. Revise to work on "neutering" their tales--robbing them of their powers--without interference. This device he called the Memory Hole, and to make it work, he placed some of his powers of revision into the hole.
All of the residents of the Golden Boughs Retirement Community
had been down the Memory Hole. From what the Librarians implied, the amount of time spent in the hole is what can be torturous; as such, the Memory Hole became a sort of punishment for misbehavior. Paul Bunyan
was almost put in the hole after his escape attempt, but Mr. Revise spared him that fate since he had already punished himself enough.
Later, when the Bookburner
attacked the facility with his army of forgotten Fables, the Memory Hole was destroyed. Once this happened, Mr. Revise's powers returned in full, allowing him to memory wipe crowds of people instantaneously.