So we all know the story. Odin sets out to kill himself some frost giants and, along the way, finds one of his very own, conveniently in non-blue packaging. He takes the baby back to Asgard and convinces his wife that they should adopt him. Further, they decide to not tell anyone the baby is a frost giant, because “no one likes frost giants and let’s give this kid a break” (I may be paraphrasing). Okay, so then what? How did Odin and Frigga convince an entire planet that Loki was naturally conceived and born from the royal couple?
I don’t think they did. At least not with the Asgardians who were adults, living in or around the palace at the time. Let’s look at the options.
Lie About the Pregnancy
So there are a few options with this one, the first of which is based on the medieval and early modern practice of “lying in”. Basically, women (of the higher classes) would retire to their bedchamber (or wherever they were going to give birth) a few weeks to months before they were due. This was to ensure they didn’t injure themselves or the baby.
The idea is that Frigga would simply announce she was pregnant and sequester herself in her room. Once a good amount of time had passed, she would present Loki as Asgard’s newest prince. This explanation is the one I’ve heard the most. but, there are a few problems with it.
Firstly, even if it would work, what about her servants? Frigga, as a queen, would need maids, a cook, midwives, ladies-in-waiting etc. to attend her. There would be dozens of people buzzing around her all the time. They would notice she wasn’t actually pregnant, yes? And that she didn’t actually go into labor. The answer to this problem is to either buy their silence, or use magic to make it look like she is actually pregnant. But, assuming either of those options work, there are two problems.
Now it’s hard to say what Asgardian birthing customs are like, or even how Asgardian pregnancy works. But assuming it’s more or less like (medieval European) humans (because that’s where the writers are pulling inspiration from, largely), we can assume that Frigga should have been noticeably pregnant before she locked herself away to make ready for birth. It’s going to look strange if all of a sudden, Odin and Frigga are all “surprise! baby’s on the way”. Short of some sort of deus ex machina spell that can permanently alter the memories of an entire planet (which is highly unlikely) people would know something was up. Furthermore, even if that worked, babies grow. Loki may have been a newborn when Odin brought him to Asgard, but after they faked a pregnancy (or at least, the tail end of one) he would no longer look like a newborn.
The second option is to use magic to either fake the pregnancy or change everyone’s memory so that they think Frigga was pregnant. But as I pointed out before, a spell of that magnitude (in the latter case) is not only highly unlikely, but if it did happen, well, it would feel like the writers were cheating. It’s a cop out. Further, there’s very little evidence to support that anyone in the MCU has the ability to alter reality that drastically–not Odin, not Frigga, and not even Loki (when he get’s older).
And they can’t take the time to fake a pregnancy with magic because, as I said, babies grow. There’s only a short window of time before Loki stops passing as a newborn.
So what probably happened then?
Odin and Frigga admitted that Loki was adopted, just not that he’s a jotun. At least to the people who need to know: those adults whose lives are intimately wrapped up with the monarchy. It would explain why, at least from Loki’s perspective, he’s always felt as if he were treated differently from his brother.
It’s definitely possible once people were told, they were sworn to secrecy (with bribes, threats, or appeals to loyalty). I doubt many people talked about it openly, since neither Loki nor Thor (nor any of their friends) seemed to know what was up. But it is definitely impossible for people (and I mean those who live and work in the royal palace) to not know.