Homuncular functionalism was developed largely by Daniel Dennett and has been advocated by William Lycan. It arose in response to the challenges that Ned Block's China Brain (a.k.a. Chinese nation) and John Searle's Chinese room thought experiments presented for the more traditional forms of functionalism (see below under 'Criticism'). In attempting to overcome the conceptual difficulties that arose from the idea of a nation full of Chinese people wired together, each person working as a single neuron to produce in the wired-together whole the functional mental states of an individual mind, many functionalists simply bit the bullet, so to speak, and argued that such a Chinese nation would indeed possess all of the qualitative and intentional properties of a mind; i.e. it would become a sort of systemic or collective mind with propositional attitudes and other mental characteristics. Whatever the worth of this latter hypothesis, it was immediately objected that it entailed an unacceptable sort of mind-mind supervenience: the systemic mind which somehow emerged at the higher-level must necessarily supervene on the individual minds of each individual member of the Chinese nation, to stick to Block's formulation. But this would seem to put into serious doubt, if not directly contradict, the fundamental idea of the supervenience thesis: there can be no change in the mental realm without some change in the underlying physical substratum. This can be easily seen if we label the set of mental facts that occur at the higher-level M1 and the set of mental facts that occur at the lower-level M2. Given the transitivity of supervenience, if M1 supervenes on M2, and M2 supervenes on P (physical base), then M1 and M2 both supervene on P, even though they are (allegedly) totally different sets of mental facts.
Since mind-mind supervenience seemed to have become acceptable in functionalist circles, it seemed to some that the only way to resolve the puzzle was to postulate the existence of an entire hierarchical series of mind levels (analogous to homunculi) which became less and less sophisticated in terms of functional organization and physical composition all the way down to the level of the physico-mechanical neuron or group of neurons. The homunculi at each level, on this view, have authentic mental properties but become simpler and less intelligent as one works one's way down the hierarchy.