(Note: Elves are not considered 'fey' in this setting.)
Ongaia was world once filled with lush rainforests and rich in magic. The fey were once dominant in this world, dwelling in a massive forest empire, living in harmony with the natural world. When the elves emerged, they viewed them as quaint, simple things, unthreatened by them, as they managed to maintain a reverence for nature much as they fey. The elves studied the natural world, developing powerful magics, and lived at peace with the fey.
However, one magical experiment of the elves went horribly wrong, transforming every elf in an entire city. Their skin blackened, their hair paled, and their eyes turned red. Their minds became twisted, feeling not only a right, but an obligation to dominate the rest of elf-kind. They became the first of the drow, but their numbers were too small. One drow city could not stand against an entire elven empire. They found their answer in a fledgling race: humanity.
Humanity was young, but numerous, and growing rapidly. They were ambitious and short-sighted. The drow used this to their advantage, manipulating the humans and turning them against the elves. The war that emerged was the first true war the world had ever known, and is still the largest it has ever bore witness to. The fey assisted the elves against the drow and humans. The war was long and bloody, and resulted in the creation of many vile weapons of war.
The drow, during this war, created the orcs through horrific experimentation. They bred humans and drow, and twisted the offspring with dark magics. The various goblinoid races were also the result of similar experiments. Many of the monsters that currently lurk the world are believed to have been spawned from this drow war machine. The drow even created the first instance of biological warfare, in the form of the magical sirenum virus, turning the fey infected with it into vampiric sirens, thirsting for the blood of others.
By the end of the war, the rainforests had been devastated, the fey driven into hiding in remote forests and glades. The drow were driven deep underground, and both human and elf-kind were driven to the brink of extinction. It is said that more sapient species were wiped out in that war than have ever existed since, but some survived. Man, elves and drow recovered and grew back their numbers. Orcs, goblins, trolls, ogres and many other vicious creations of the drow found themselves free of their shackles, with no master but their own bloodlust.
Some say the gods were born in the bloody wake of that war, either the souls of so many dead, violently, with the powerful magics thrown about and the death of so many fey, came together to form powerful deities, or perhaps the world itself created them as a defense, to prevent such a conflict from ever again threatening its existence. The fey themselves are the only ones long-lived enough to still remember such times, and they have all but cut themselves off from the other races. The youngest of they fey have been raised to fear and mistrust the other races, while the oldest, who still remember the carnage of the war, dislike, perhaps even despise them. There are even some fey who would prefer their people stop hiding and take back the world that was stolen from them.
Meanwhile, the drow, driven deep underground, have been waging war with their dwarven neighbors ever since, which has lead to dwarves coming to the surface for the first time, and interacting with the other races. They enjoy their closest relationship with humans, whom they trade with constantly, keeping their economy strong, allowing them to stay strong in their constant battle with the drow. Their gnomish cousins did not fair as well against the drow, and now have little they call their own underground, and have all but completely fled to the surface realm.
No one is quite certain where the halflings came from, quaint, peaceful little creatures they are. They are, perhaps the only race in the world to have never known major conflict, apart from fending off the occasional goblinoid raiding party. Still, despite their laid back nature, they have been known to show remarkable bravery when the situation calls for it, and their amiable nature has won them the friendship of most other civilized races.
It has been many aeons since that brutal war, though its scars still linger across the world. It has faded into folklore and legend, and only the reclusive fey truly recall what happened back then. The other races have all settled into their roles in the world, developed homes for themselves, and fight to defend them against enemies, while treating with their allies. The world has moved on, all except the fey.
So. How's that?
If you don't wanna use it, that's cool. I'm actually quite proud of it, might use it for a story or something, perhaps talk some friends into doing a campaign in this world xD