A brief history of time...
Thousands of years ago there was a vast Elven empire with advanced magic and technology. A great calamity struck, destroying the empire (and the entirety of the surface elves) as well as unleashing an evil known as the "Horrors" upon the land. At night they would hunt, and the surface was no longer safe. What was left of humanity had to survive in enclaves underground, hiding and walling themselves off from the horrors.
The Underdark struggled to absorb and sustain a massive influx of refugees. Caverns were intentionally collapsed, both to protect from the horrors as well as the constant flood of refugees, and focused on survival. Knowledge of all sorts was lost in the struggle to just survive. Art, History, Arcane Magic, Technological Wonders, Divine Miracles and the gods who grant them - lost to time. Hundreds of thousands of people died. Desperate people did many desperate things, and the collective trauma is common referred to as "The Age of Darkness".
Thousands of years later, people started expeditions to the surface. The horrors were still present, but in far less numbers. People were ready to return to the surface and were able to beat-back the horrors to the other side of the Bulwark mountains and confine them to the desert known as "The Wasted Lands". Humanity could return to the surface and rebuild. These were the golden years. The surface was wild and dangerous, but also filled with opportunity and space. So much space, and food that wasn't fungus. As civilization recovered, knowledge gradually returned... But it was slow progress.
Everything changed in 1492. Elves returned from across the dangerous seas that had defied explorers for the last 1500yrs. They brought technology and magic, civilization and order from their home continent of "Goldenhome". At first they seemed friendly, but once they discovered a specific blue crystallized mineral in abundant supply throughout the Bulwark Mountains things took a violent turn. "Orichalcum" is what they called it, and it was so valuable to them that they murdered for it. The war stretched on for years - the forces of Goldenhome unable to bring troops fast enough to advance, and their technology and magic too strong for the natives to overcome. Eventually they finished their war-ending project: a full-time teleportation gate between Goldenhome and the continent they had renamed "Tar-Calion". Without the slow and dangerous sea journey slowing them down, a massive influx of troops was able to end the war within the year. The elves of Goldenhome (locally referred to as "Sylvans" to distinguish them from Drow) now controlled the southern half of the continent. Or at least the above-ground portion.
Present day is a little bit over 50yrs since the Sylvans arrived. They rule the surface from the Bulwark Mountains south. The Underdark is loosely divided into three territories (Drow, Dwarf, and Gnome) that have ruling councils/families.
The State of Magic...
Much knowledge was lost in the Age of Darkness, but the arcane arts were hit hardest of all. Recreating the lost arts has been a painful and slow process, and it's still nowhere near the legends from the Age of Light. Spells above 4th level are incredibly rare. While "common" and "uncommon" magic items are relatively attainable, rare magic items are extremely valuable and rare.
The Sylvans appear to still have access to some of the ancient ways. There were reports from the Orichalcum Wars of miraculous/mythical feats of magic in battle.
