Board Thread:Spoilers!/@comment-5821891-20130129005409/@comment-6207588-20130201135642

From the Stranger:

Blue Fairy: Remember, Pinocchio. Be brave, truthful, and unselfish. So long as you do that, you will always remain a real boy.

A lot of people are theorizing that it will deal with restoring Phillip's soul to his body while at the same time restoring August to his flesh form...they have said we would know August's fate this season and they are running out of episodes.