When Jacob's grandfather is killed, his death is surrounded by mystery. His family believes he was hallucinating, weakened by the senility of old age, and wandered off to be killed by a dog in the woods. However, when Jacob finds his grandfather's body, he sees something in the woods.
I saw a face that seemed to have been transplanted directly from the nightmares of my childhood. It stared back with eyes that swam in dark liquid, furrowed trenches of carbon-black flesh loose on its hunched frame, it mouth hinged open grotesquely so that a mass of long eel-like tongues could wriggle out.
This monster haunts Jacob. Though his family and psychiatrist tell him that he is delusional, he cannot shake the memory, and it is not until he meets Miss Peregrine and Emma and learns more about the peculiar world that this monster's identity becomes clear.
Miss Peregrine tells Jacob about the existence of creatures called hollowgasts. These monsters are peculiar people who attempted to master time in the way the ymbrynes do and succeeded only in transforming themselves into soulless, bloodthirsty creatures with no apparent memory of their peculiar life. As Miss Peregrine describes them:
It's believed that hollows can live thousands of years, but it is a life of constant physical torment, of humiliating debasement—feeding on stray animals, living in isolation—and of insatiable hunger for the flesh of their former kin.
The hollowgasts are driven by a desire to consume peculiars. They hunt them down and destroy them, and they are at a distinct advantage because they are invisible to the naked eye. Everyone, both normal humans and peculiars alike, is unable to see them. The only exceptions—that we know of—are Abe and now Jacob. Their peculiarity is their ability to "see the monsters," as Emma puts it.
Jacob also learns that when his grandfather left the time loop, he continued to hunt hollowgasts using his unique talent. But, because he was a peculiar, they were also always hunting him. So, the visions Abe reported of monsters coming to get him were not the senile delusions that Jacob's family believed them to be, but his way of communicating that the hollowgasts were after him. When Jacob learns this, and that he, too, has the ability to see the hollowgasts, he reaches the conclusion that the monster he saw in the woods was a hollowgast which had succeeded in its goal of killing and consuming the peculiar soul of his grandfather.