Military action
A great war between dwarves against a union of humans and elves. It's also called the Lanroy war because most military actions centered around Lanroy forest.
The dwarves began spreading from the south towards the north. Humans and elves united in the war holding them back and slowly regained the lost lands of Lanroy Forest and Miraland.
The dwarves were forced to retreat to the Frost Peaks and ever since that day never regained political influence in Northern Valon.