Ok I think I can explain. In Hetalia, countries have personifications of them--they appear human but are immortal and they can live on as long as their country stands. Even their capitals and cities have personifications. The reader in the oneshot isn't human. She's represents Vietnam's capital, Hanoi, but she doesn't know how she ended up in Feudal Japan. She's appears to almost at Inuyasha's height by one centimeter, but soons become a target for his brother. She meets the wolf demons first because met Ayame.
If it's still confusing, I'll try another way to explain it. (* ^ ω ^)