Thalamor has a long history, mostly shrouded in myths and legends. According to ancient doctrine, the world came into being during the first age. Only the gods, Sinthear, and the demons, Nathaid, lived then, and they fought for dominion over the new land. During the eon-long conflict, terrible and fantastic creatures were created from both sides to gain the upper hand. The gods finally won a costly victory and drove the demons into the darkness outside the world, Dorc Hadath, from which they could never return uninvited.

Then came the second age, when the gods decided to populate the world with their chosen people and leave its fate in their hands. The elves were the first to see the light of day and lived for thousands of years by the gods' side, who taught them about the land and its inherent magical power. They were nurtured to care for the peoples that had not yet come into the world so that they could lead them in the gods' stead. Afterward, a variety of different peoples and creatures were created, including the dwarves, orcs, and humans. When the work was finally completed, the gods left the world. Many have wondered why they couldn't stay with their creation, and although the answer has eluded most, it is said that the oldest of the elves have carried the answer with them since time immemorial, but refuse to share it with anyone else.

The third age was the golden age of the elves. They led the peoples as the gods had taught them and managed to maintain the world's balance despite many severe crises and conflicts. Knights-errant, evil sorcerers, dragons, and orcish raiding parties; there was no threat that was too powerful for the elves. From their great empire Mor Admad in the northern primeval forest Sylvan, the elves observed and guided the growth of human and dwarf lands. In the north, the twin kingdoms of Antuath and Aimsir were founded by Thiarnerna and Ceannerna, human royal dynasties of the noblest of blood. With the blessing of the elves, humans spread to the south where the principalities of Aterno, Kapernum, Virentia, and Brunnea emerged under their northern rulers' foresight. Meanwhile, the dwarves created some of Thalamor's greatest wonders; the Sun Hall in Faoi Gorm, the Sky Road in Thar Dearg, and the Wind Chime in Marbhalla, among many others. The proud masters of the underworld forged beautiful crown jewels as gifts to the princes of humans and elves, and helped with the construction of several mighty castles and forts. The third age was like a dream, but all dreams must end.

Less than a century ago, an industrial revolution began in the Southern Kingdom, a development that would overturn the order that the elves had established.The fourth age began with red fire and black smoke.

Magic is a supernatural force that permeates Thalamor. According to the elves, magic is the force with which the gods created the world and everything in it. The gods then gifted the elves with this power in order to guide the lesser races once they had gone. In essence, magic is the power to bend or break natural law using willpower. There are many different ways to channel and focus magic, from spells and chants to rituals and runes, but the thing they all hace in common is that it's very diffucult to use and takes a long time to master. In addition, the use of magic is exhausting due to the intense focus required to succeed. Needless to say, most great mages in history have been elves, although there have been some of reknown among the other races.

Magic is not a very popular phenomenon is Caledon. Since the advent of industry, humans have turned away from the old ways, and view magic with suspicion. The most important factor leading to this shift in attitude is the effect that magic energy has on machinery. Whenever magic is practiced, it creates a field where natural law is altered, or even suspended. The exact effect is hard to guess as it varies with the nature of the spell and its magnitude, but the catastrophic consequences this has on industrial equipment cannot be understated. Mages are therefore often banned from sites where crucial machinery is housed, such as factories, power plants, and railway stations.

Since the Industrial Revolution, Caledon has grown immensely and transformed into a metropolis of great significance. It is known as the largest city in the world, houses the largest port, and is the heart of all international trade. Since the revolution, railways to the rest of the neighboring cities have been built, along with a subway, paved roads, and modern sewer and gas lines. Many famous monuments and buildings, not to mention numerous factories, have also been added.

Caledon is divided into different layers and districts that have been distilled as the city has emerged. On the east bank of the Kaper, the more affluent quarters are located, and on the west bank, the impoverished slums. In the south, the harbor extends towards the Twilight Sea with warehouses and factories, and in the north lie administrative buildings and institutions of learning. The central station for the railway network is located in the northeast, and the infamous prison island nicknamed The Pit lies off the harbor in the southwest.

Outside the city walls, villages and farming communities spread inland. Here, most people live as they always have, even though novelties from the big city are slowly finding their way out.

Caledon's population has exploded in the last century, from around three hundred thousand to over a million. The absolute majority of these are humans and human hybrids, along with a large minority population of orcish slave workers. In addition to these, there are about a thousand dwarves and a handful of elves living in the city.

Only humans enjoy full citizenship in Caledon. The remaining population live with varying degrees of privileges and segregation, but are not allowed to own private property or hold public offices.

Dwarves are the people who enjoy the most privileges after humans in Caledon. The overwhelming majority of them live in fort-like embassies, called Khâzad or clan halls by the dwarves themselves. From their Khâzad, dwarves conduct trade and handle diplomatic relations with the humans in the city. Each Khâzad is owned by the clan in question and within its walls, dwarven law applies, not human. There are five Khâzad in Caledon; three in the northeastern district, one in the southeast, and one in the western slum. Rumors constantly circulate in the city's pubs and inns about all the treasures the dwarves have gathered in their massive houses, but there are few who actually attempt to seize anything as no one has ever heard of anyone returning after such an escapade. The few dwarves who live outside the city's Khâzad are usually outcasts and clanless. They usually keep their distance from other dwarves and live with the city's humans. It is common for such dwarves to become sought-after craftsmen and blacksmiths due to their cultural inclination for the trade. Overall, dwarves are well-regarded and respected by Caledon's population, except for sporadic jealousy towards their alleged wealth and some suspicion towards their reclusive nature.

Elves are an unusual and sometimes sensitive element in Caledon. Only a handful of individuals live in the city, and these often live alone and far from others of their kind. People often act politely towards elves, or stay out of their way entirely. This unfortunately rarely stems from actual respect for their people, but rather from fear. During the early steps of the Industrial Revolution, the need for fuel was great, and the ancient Umbran forest was cut down. The forest didn't house a proper elven population, but many elven warriors took up arms and came from the north to stop the loggers. Consequently, many families in Caledon have lost a member to the elves' arrows, and the horror stories made up about the children of the forest are still told today in the city's salons and cellars. Because of this, but also because of their reputation as magical creatures, a nervous atmosphere surrounds the elves in the city, especially in all districts where machines are used. They are rarely allowed near either train stations or factories, even though the constables whose job it is to prevent them probably wouldn't dare stop them if they really tried. The fear of the unknown that the elves represent means they rarely have to endure open discrimination, but an elf would have a hard time integrating with the human society in Caledon even if they tried.

Half-elves are generally liked and accepted in Caledon. They enjoy pretty much the same social status as humans, except for the right to hold public office. However, half-elves are forced to cope with a certain degree of exoticizing and are considered particularly exciting to have in one's social circle, or particularly remarkable to have had as a romantic conquest. They are often expected to know the elven language, or possess knowledge of magic.

Orcs are despised and feared in Caledon, to such a degree that they are not considered persons but rather beasts or animals. It is permissible and even common among entrepreneurs to keep orcish slave workers who toil in factories and warehouses. Orcs are not allowed in the city unless they are someone's property, and even then, they are only allowed to reside in specific ghettos or at their designated workplaces. Orcs found outside these areas are ruthlessly hunted by the city's constables and hanged without trial if they have not already been killed during the hunt.

Half-orcs are treated with a mixture of disgust and pity. They are not hated in the same way as orcs, but there are few who want to mingle with their kind. Often they are left to orphanages from an early age as it is considered very shameful for a family to have orcish blood in the family. The outsider status and rootlessness often lead to a life marked by poverty, misery, and crime. No respectable town dweller would voluntarily choose to be involved in business with a half-orc.

Despite Caledon's wealth and development, large parts of its population live in poverty. Over two thirds of the inhabitants live in the slums west of the river, often in crowded quarters with several families per house.