The Doll's House was a toy as well as a powerful psychic resonator.
It was a perfect miniature representation of Ilbridge House, one of the most haunted houses in England. The architecture duplicated the relationship between the psionic nodes in the human brain.
When the Quoth used it as their new home, the power of the House radically increased. Montague used it to physically transform his followers until it was stolen by Dominic Montfalcon.
The Seventh Doctor helped free the Quoth from being unintentionally used to increase the psychic powers of others. After taking them to their new home on a neutron star, they built a millimetre-high duplicate as a relic of their enslavement within it. (PROSE: The Death of Art)