Though the Quinkan are capable of possessing living people for hosts, there is some evidence that zombie frills are actual walking corpses. They have a pale coloring, and they often emerge out of the ground. There's even a large cemetery where swarms of them emerge from beneath the tombstones, further evidencing that the Quinkan reanimate lifeless shells.
It is not known how so many Frills were killed, though it could be because Boss Cass sold them out to forge an alliance with the Quinkan by providing them with auxiliary armies. It could also be that Cass, having invited the Quinkan to his dimension, actually attempted to fight them off so he would look like a hero to the desperate people of Southern Rivers, and failed.