This is just a small attempt, I'd give it for discussion and don't expect it to be implemented in any way. But maybe the Devs writing the story can get inspired by some of the given ideas, and that they are at least considered is all I ask for.
There's more, of course, but I tried to keep it short. Written in encyclopedia style for the most part. Q&A at the end to clarify a thing or two about the 'lore'.Summary
Illarion (Fields of Passing in ancient Elven) is a strip of land featuring many different terrains and climate zones. It is mostly surrounded by water and nearly impassable areas and is known to host some of the most dangerous creatures in the known world, as well as unmatched riches and mineral deposits. Furthermore, it is of some political intrest as it lies between three big spheres of influence, the Empire of Salkamar, the Albarian High Kingdom and the Free Cities of Gynk.
Due to the riches Illarion offers and it's neutrality, the land has always been frequented by adventurers, scholars, entrepreneurs, mercenaries and other individuals who know how to look after themselves in a dangerous environment and pursue their own goals.
Geography
[Leaving out what we can see from the new map] Illarion's northern border is drawn by the Syrita Bay, an extension of the Disputed Sea, and by the Adamant Wall, which shields it from the Dread Lands. East lies a vast portion of the Great Ocean and it is unknown whether and when land might be found again sailing further east. The same Great Ocean also marks the southern border of Illarion, although a few islands are known to be within reach, Gobaith among them. To the west lie further extensions of the Great Ocean, the Nameless Mountains and the Syrita Bay.
Syrita Bay and the Disputed Sea.
The Syrita Bay and Disputed Sea span about 120 nautic miles before reaching the shores of two great nations, the Empire of Salkamar and the Albarian High Kingdom, hence the name of the Sea. Albar and Salkamar have been fighting over the said waters for centuries, although sparing the Syrita Bay and leaving it to be inherited by the people of Illarion, or pirates. While Salkamar lies directly north of Illarion, Albar can be found to the North-East, sharing a border to the Dread Lands with Illarion.
The Adamant Wall and the Dread Lands
The Adamant Wall blocks the land route in the North-East of Illarion, spanning between extensions of the Syrita Bay and the Great Ocean. Another Adamant Wall can be found on the other side of the Dread Lands, around 60 miles to the North-North-East, which also marks the Albarian border. The Wall is said to be of ancient elven descend, but is today manned by an independent order of knights, mainly descending from Albar and individuals from Illarion. On the Albarian side, the Wall is entirely manned by the Albarian Royal Forces.
The Wall itself is around 40 feet high, but is rumored to have some magical power within it's granite stone, making it impregnable to both physical nd magical attacks from the fiends that roam the Dread Lands. Some claim that Illarion is actually a part of the Dread Lands, but was saved for some reason aeons ago by the ancient elves who kept the inhabitants of the Dread Lands at bay. (read more about this in History) While some heavily fortified caravans sometimes make their way through the Dread Lands, it is often too dangerous and the sea route is preferably used.
The Great Ocean and Gobaith
Insuperable and often wild from storms, the Great Ocean lives up to its name. It features a number of islands south of Illarion, of which most are uninhabited, with a few trading posts and pireate dens here and there. Roughly 90 nautic miles south of the Tormented Mountain lies the island of Gobaith, which was destroyed by a cataclysmic deluge a couple of years ago. Those inhabitants who survived the cataclysm mostly immigrated to Illarion, making up a considerable proportion of its population nowadays.
The Nameless Mountains
The Nameless Mountains equal the Great Ocean when it comes to harsh weather and being impassable. There are said to be a few trails, but they are steep and snowy and not suited for larger parties or even cargo. They span around 200 miles before they border the Free Citites of Gynk, again making the sea route preferable. The extension of the Great Ocean between Galmair and Gynk is considerably calm and frequently used for trade, as well as piracy.
History And Economy
[Keeping it short for the proposal] Illarion is highly shaped by volcanic activity and thus features the highest density of mines and availability to raw materials in the known world. This came with a price, though, as there are many entrances to the Underdark in Illarion, some which have been found already, some which are yet to be discovered.
Just like the Dread Lands, the Underdark seems to lie directly under both strips of land, which is the source of the rumor that Illarion was once actually a part of the Dread Lands, but eas liberated by the ancient elves and shielded by the Adamant Wall. It is likely that the elves have also sealed all caves leading to the main plains of the Underdark (Drow Empires and Seven Hells), thus making Illarion habitable. Those corridors and passages were never sealed in the Dread Lands, thus making them inhabitable and widely unpassable.
Some legend also has it that the ancient alves have perished and that the Archmage of Runewick has upheld their magical barriers and seals, but some claim that all of them lie barren and ripe for the taking of the inhabitants of the Underdark. Meanwhile, three settlements have formed on Illarion: Runewick, Galmair and Cadomyr. While Runewick was founded by the Archmage for reasons widely unknown, it is today a tranquile place of learning, mass and crafting. Galmair was founded by a Gynk entrepreneur and his family, the Guillianis, rule the place until today. Galmair is ripe with trade, having easy access to the Syrita Bay and thus Salkamar and Albar, and although longer than from Cadomyr as through the Syrita Bay, also access to a sea trade route to Gynk. Cadomyr was founded by an Albarian noble family, Edwards, and is also still under the rule of that family. The city has given up its former slave trade market in favor of crafted goods and raw materials, most of what Galmair also produces. Cadomr has the easiest access to the ports of Gynk, and considerable access to Salkamr and Albar. Cadomyrian goods have to be mounted on caravans, crossing the Kantabi Desert and Nargún's Plains first, before they can be loaded on ships sailing to the Northern Realms, though.
A few important questions about the land, answered Q&A style
Q: Why is Illarion worth living in again?
A: It is the richest land when it comes to adventure, treasures and raw materials. While Albar, Salkamar and Gynk have their share of mines, they are nowhere as dense and properous as in Illarion. Illarion exports a lot of goods, mostly raw materials, but also crafted wares of all kinds. It is the most dangerous land as well, so people ought to know how to defend themselves, or look for the protection of one of the settlements while pursuing their craft.
Q: Nice, nice. If Illarion is so rich, why has no empire occupied it yet?
A: Albar and Salkamar will have thought about attacking Illarion, while Gynk is made off many cities and values trade over everything. However, Albar and Salkamar know that if either one of them would be able to seize the mines of Illarion, the century old power struggle between the two Realms would end in favor of the capturer. Thus, both Albar and Salkamar have declared Illarion independent and trade with the region as none of them would allow the other to occupy Illarion. Should the struggle between the two Realms be won without Illarion one day, the winner of the conflict is sure to take Illarion next, though.
Q: I see. So basically, Illarion is left to be self-governed by whoever is capable enough?
A: Exactly. That's why we have three citites which are very, very different. No city can really die, though, since the trade with Salkamar and Albar is lucrative as the two struggling Realms always try to buy the raw materials from Illarion, and Gynk is likely to trade with anyone at all times.
Q: Okay, but what's that stuff about ancient elves, the Underdark and the Dread Lands?
A: Trying to make sense of Illarion's wilderness being completely overrun but a variety of horrible beasts. No world could be like this everywhere, I would imagine the roads between Albarian or Salkamaerian towns not be overrun by Lichs, Raptors and Drow. They are in Illarion, though, as it fits the history of that land. Riches have a price, and this is the price Illarion pays. Plus, having literally hell just around the corner makes for some good stories in the future and also explains why the caves that are already in the game look as hellish and volcanic as they do.