@follows-the-bees comments here made me think about how Ed frames so much of his life and his understanding of the world as stories. He turns himself into a fantastical sea monster to kill his father, he imagines Stede as a fantasy creature who crosses the line between life and death. Blackbeard himself is a myth and a legend whom Ed initially invents as a form of pageantry and protection, and who escapes from him and starts being taken over by racist white men and an imperial power caricatures and horror narratives.
With Stede's letter, Ed finds himself written into another story, but this time it's a love story. It's Stede's dream about him, about connecting to him across an ocean, about being intertwined with him. It is the first time someone has put Ed down on paper not as a monster or a myth, but a human being who is deeply loved. It may be the first time sees himself through someone else's eyes and realizes that he is loved, not feared.
Stede has drawn and written Ed, over and over, as he sees Ed and as Ed truly is--not a ghoul, not a monster, not a racist caricature, but a beautiful, lovable man. There are no lies about him on that paper or in anything Stede writes or draws.
The physical act of writing their love into the world--and Stede also metaphysically writes their names on each other--helps Ed to accept himself as someone who is loved and who can be loved. Stede tells Ed their story.