Parasect's growth has been stunted by the mushroom that has resided on its back since birth. The mushrooms sink their spores into the host's brain, giving the parasitic mushroom total control over the Paras. Due to being possessed for so long, the eyes have whited out and the mushroom has drained almost all of the Parasect's life force, which gives the mushrooms the energy to grow into a gross exaggeration of its former size.
Once they are that huge, they take total control of the Parasect's mind, creating a "hivemind" with other host Parasects. To ensure survival, the mushrooms force the Parasect to breed and once the eggs are laid, the mushrooms coat the eggs with their parasitic spores, ensuring their offspring will wind up in the same, dead-eyed and doomed fate they currently have.
People have often asked the designer of Pokémon, Satoshi Tajiri, what is the story of Parasect, slightly troubled by its cold and dead stare and its unnerving PokeDex entries that describe this unfortunate Pokémon as basically possessed by the fungus.
When the issue is presented, Tajiri becomes silent and somewhat withdrawn. He refuses to go further into the subject. Although he refuses to openly talk about the subject, several hints have been left behind. Whether they are purposeful or not is unknown, but what is obvious is that this Pokémon resembles a possessed being. When this was presented to Tajiri, he simply replied, "Parasect is simply a Pokemon. Nothing more. Stop overthinking it!"
On further investigations into the origin of the Pokémon, it is found that Parasect's original name was supposed to be Parasyte, which related to a manga focused on a race of possessing aliens. The name, though, was forcibly changed due to copyright issues brought about by the authors of the manga Parasite.
This information was almost disregarded until it was observed that Mt. Moon, the home to Paras, was also the home to the alien race of Clefairy.
This led people to believe that Clefairy's reason for being on Earth is basic and clichéd...
...to possess all known life.