Creation of Dragons

Before The Sundering, dragons did not exist on the world. They were created by the Lords of the Fae as part of their punishment of the elven civilisation, for the elves' predation of the fae. Human spellcasters hunted down minor fae creatures like brownies, pixies, fairies, and lesser fae animals, draining and consuming their essences to allow the dark mages to convert themselves into the first of the elves.
At first, the great Lords of the Fae ignored the elves' activities as beneath their notice, and the minor fae as unworthy of protection. But then the cries of the minor fae became too great to overlook as their numbers dwindled, and the Lords turned their attention to what was happening. What they saw horrified and enraged them, and they decided to take action.
The Fae Lords gathered in their great Court, and turned to the greatest Lifeweaver among them, the Smith Lord known as the Vul-Khan. As he prepared the loom to create a new form of life, each of the Lords stepped toward the pool of liquid starlight that shimmered in the centre of the chamber. Each Lord sang the songs of creation as they spun a gift for the new creature out of the liquid magic. One crafted impenetrable scales, while the next gave razor-sharp claws like swords; other gifts were strong wings and a breath weapon that gave form to the fury within the heart of the creature. As each in turn crafted their gift, the Vul-Khan wove and hammered it into the fabric of the creature taking shape. Eventually a massive predator was created, able to hunt down even the most powerful of the elves: the first dragon. The Vul-Khan plucked handfuls of its essence over and over again, crafting a new dragon from each; lesser than its progenitor, but still indomitably mighty.
Foreseeing the great ritual that would allow the elven nobility to reach undreamed-of heights of power, the Fae Lords prepared to strike as the spell reached its climax. They created a mountain of dark stone honeycombed with passages, and filled the passages with the new dragons. As the elves prepared to consume the essences of their sacrifices the Lords opened a portal in the sky high above the site, and threw the mountain into it.
Far below, the unsuspecting elves were arrayed in concentric circles, with scores of priests and mages performing the rites surrounded by thousands of nobles, and tens of thousands of those who served them. They expected to receive immense power; what they received instead was death, in a cataclysm on a scale beyond any conceived of, and the end of their civilisation.
As the mountain fell, the swarms of dragons emerged from it, circling high in the sky above its plummeting mass. The impact smashed both the mountain and the ritual site into rubble, and the backlash of the uncontrolled magical ritual created an explosion greater than even the Fae Lords had anticipated. The entire elven civilisation was obliterated in an instant, together with much of the centre of the continent, leaving only the rubble to be drowned by the in-rushing sea.
Shards of the mountain remained, held aloft in the strangely twisted magical effects of the ley lines which had been linked to the former ritual. The dragons considered these their home, and roosted in the chambers where they had been birthed. From these islands of floating stone, they flew out to devastate the surrounding realms in a plague, as the Dragon War began.
Eventually the remaining kingdoms were able to muster sufficient strength to beat the dragons back, and they retreated to the place now known as the Mountains of the Sky. Although the dragons are both long-lived and lay clutches of eggs after breeding, there are regular internecine struggles for dominance, keeping their numbers sufficiently low that they are no longer the world-ending threat they once were.