From long before the Arachnid War, humanity was split, primarily, between two factions – the Drakava to the North, who followed the Reborn Dragons, and the Rafrees led Mirmar, who dwelt in underwater cities to the south. These factions were united in the Draltha Imperium, but resplit after the Arachnid War into the Drakava Nations to the North, led by the Reborn Dragons and their descendants, and the Rafreesian Nations to the South, led by High King of the Seas, Rafrees, and his sons. For millennia after the Arachnid War, these two factions largely kept to themselves and lived in peace with one another.
This arrangement worked well until the Mirmar's southern sun began to dim, forcing the Rafreesians to migrate north or die. Rafrees decided that he would be better suited as a ruler of the whole world and, as a result, broke the Covenant of Balance by declaring war on the Dragons and the nations of Drakava.
At first, the Mirmen and Kaiju seemed to have the upper hand, as they were able to control the water levels and move freely through the flooded areas. Additionally, Rafrees's son, Hektha, built his fortress on the Mistisles and covered the whole world with a perpetual, thick, magic fog. This prevented the Dragons (who's powers, including the power of flight, were dependent on sunlight) from drawing Kar or even communicating between hemispheres. The Rafreesians then proceeded to flood the entire western hemisphere, killing nearly everybody and slaying all the dragons who were stranded there.
To the East, on Erendra, the last remaining Dragons were all weak-blooded and unable to draw any Kar from sunlight. They rallied around Mt. Krakova, the tallest mountain in the world and drilled the first great Karos, now known as the forge of Drakava. Using the kar from this karos, they managed to kill Rafrees on the field of battle, ending the war and allowing the waters to recede.
Hethka remained in the Mistisles, trapped there behind enemy lines and held hostage by aquatic saurians. Now, he continues to blanket the surrounding sea with mist, cutting off the Western Hemisphere from the Eastern Hemisphere. All of the remaining Dragons now lived on Erendra, in the East. They regrouped and formed the Empire of Terios. The Mirmen and Kaiju retreated to their underwater kingdoms, and a fragile peace was established between the remaining factions. The war had left its mark on the world, and the remaining survivors were left to rebuild and recover from the devastation wrought by the conflict.