There are 4 main races in the game: Dwarves, Elves, Halflings, and Humans. At the start of the game, the only race available to players are the Humans.
The Humans are relatively new on the block, and their expansion across the continent has been astonishing to the much longer lived elder races. The Human expansion was relatively peaceful at first and they were welcomed by the other races. There was a short period of cooperation between the elders and the Humans. However Humans are short lived and they soon forgot the help they had received when first arrived. Soon settlements began to appear in areas long held sacred by the individual elder races.
The elder races had long lived in balance with one another. Each an ancient and proud people with traditions and manerisms well established and accounted for. All too soon the Humans were stepping on these traditions and causing strife between the peoples of all the lands. A counsel was convened by the elders to decide what to do with these upstart humans. The younger hotheads of the elder races felt that war and total annihilation of the humans was called for, in fact the only answer. The older cooler heads councled patience. Such youth they said will grow wisdom over time. The humans can learn to live in harmony with the peoples if given enough time. The cooler heads prevailed at council, and embassies were sent on behalf of the Elders to try and reason with the Humans.
At this point the Humans had fractured into several different tribes. The elder diplomats went to the leaders of each in turn. Some agreed to live in harmony with the elder races, some simply placated them with honey’d words, while others simply scoffed at the elders requests and threw them out. This divergence in temperament confused the elders completely. Never had one race been of such differing views. They soon realized that any studies of the Human race would not hold up under such high degree of variance. The Diplomats then determined to aid and teach the Humans that were willing to work with the elder races. It was felt that if those humans who would live in harmony with the other races prevailed over their closeminded cousins then a solution might be found.
It was a doomed alliance however, because of the varying nature of humanity. Through greed, cowardice, sloth, and the best of intentions, the alliance was made known to the other tribes. The secrets of making magical items was stolen or sold, and the Humans who were willing to live in harmony with the elder races were branded as traitors to the human race and hunted or banished across the continent.
And so began the slow decline of the elder races. They waited in vain for humanity to learn the wisdom of the elders. Now far too numerous to exterminate, even if they were all of a mind to commit such an atrocity. The Elders have been fighting a withdrawl, slowly being confined to smaller and smaller tracts of their once boundless territories. The Dwarves withdrew first into the vast spaces underneath their mountain home. Then the Elves to their forest preserves, and finally the Halflings to their Mountain valleys.
If you wonder, proud human when you greet the Elders and get a cold return, then look no further than your grandfather!