Far up in the frozen north is a volcanic mountain range that runs east to west on each side of a long, hidden valley. This land is known as Kharast.
For millenia,the valley was a hidden place where the fey flourished in a beautiful forest. In the mountains were several mountain holds of the dwarves, and they maintained a strange peace with the sasquatches of the outer mountains, and a distance from the fey.
When men came, outcasts fleeing their war-torn lands to the south, things were likely to change - but only one man (a woman, actually) was the catalyst, as the men settled in the valley and befriended the fey there.
Malasindra was a sorceress of no mean talent, and ambition. Her first acts were welcomed by the dwarves, as she called upon ifrit to help with the forges, and the dwarves' labors bore fruit. With her help, the first of the brassmen were forged, and the mines all but exploded with high grade ores.
The efreet took notice. They took their time. When Malasindra was growing old, they came to her and slowly corrupted her, offering immortality. Malasindra became a lich. She opened a permenant gate to the plane of fire, and the great magma dragon Rokrash broke through.
The war was brutal, and both men and dwarves were decimated. Many of the fey went unseelie, but the sprites protected their forest from the cruel tyrant, and worked with the men living there. Dwarves and men held the final holds together, with help from the sasquatches who hated the sudden burning heat pouring up from several peaks, and the brassmen who had served loyally all of their existences.
The war was hundreds of years ago, but Malasindra still reigns, with Rokrash and a band of efreet assisting her. The men and dwarves are no longer individual races, as both came painfully close to extiction, but with help from the fey that were still allies, nature found a way. The sasquatch still help, and sprites have become solid allies, when they meet.