Meaning of 'sentirsi' in this context

Question

I'm reading Italo Calvino's Fiabe italiane. First story is about the fearless Giovannino.

Giovannino goes out travelling the world, comes to an inn and asks for lodging.

"Qui posto non ce n'è", disse il padrone, "ma se non hai paura, ti mando in un palazzo".

"Perché dovrei aver paura?"

"Perché ci si sente, e nessuno ne è potuto uscire altro che morto."

Now, 'sentirsi' here must mean 'to be haunted', because that's what the whole story is about.

But then, why does neither Collins nor Oxford dictionaries list this as a meaning?

Answer 1

The meaning is the one you guessed, as documented by Charo. Consider that it's definitely not a common usage at the point that it in many editions of this story you'll find it in italic. Just one correction: I wouldn't consider this a voice of sentirsi, but rather of sentirci (to hear there [spirits?]) with a si impersonale.

Answer 2

It could simply mean "here, people feel fear." La paura si sente qui. Ci si sente.