She said to Fettes that Dr. MacFarlane out of shame didn't acknowledge her as his wife so she had to play maidservant.
But I LOVE this movie. The story is a good one, but man what a performance by these actors! Naturally I'm talking about Karloff but Henry Daniell, Edith Atwater and Russell Wade were right on point with him. Superb!
In real life, Dr. Robert Knox (the so-called teacher of "Toddy" MacFarlane, and the doctor who bought the dead bodies of Burke and Hare's victims) had a relationship with his housekeeper similar to Meg's with Toddy.
If you look at the responses to your question, they are both very speculative. Why? Because this movie FAILS miserably to address this major aspect. You and I will never get a proper answer to your question because a proper answer doesn't exist. I find it very frustrating...
I thought this was really weird and barely even recalled it as a plot point until watching tonight. I'm sensing the hand of the Code in this one, folks. I think Meg was probably a prostitute or some sort of loose saloon woman and they were gun shy about going into that sort of thing. The bigger question thus becomes: If he didn't want to acknowledge her as his wife, why marry her in the first place?
Plenty of upstanding young men married "unsuitable" young women when class didn't matter and abandoned them when it did. At least McFarlane doesn't abandon his lady, even if he doesn't acknowledge her. Of course a more cynical person would say he keeps her around to keep an eye on her.
It is not our abilities that show who we truly are...it is our choices