The best part about this rationale is that the Squalb is yet another fictional character living in her imagination, which I suppose makes sense then they would know each other. The Squalb is a Medeski, Martin & Wood song that Matilda has been obsessed with lately. Every car ride has us listening to the Squalb song/story at least twice.
Below is a video someone made with their kids that features the Squalb story so you can enjoy it too. I haven't shown it to Matilda yet just because I want to get her to draw me what she thinks a squalb looks like before she sees anyone else's drawing.