A fertile location in the main continent created by Eijra.
The halflings lived in the golden hills, followed soon after by the dwarves. Both were created by the goddes Eijra
About the same time as the dwarves came to the golden hills, the eladrin grew up to their northwest. During this time, doppelgangers infiltrated all three races.
The dwarves and halflings, both being worshippers of Eijra began to work together, with dwarves as the leader, though eladrin began to take control of some halflings as well. As a counter to this, the dwarves formed the Kigdom of Duska Krak, taking total control over the Golden Hills, and standing against the eladrin. This resulted in one battle, but little else other than hostilities.
Then came the frost giant war. Followed by the Tsarok invasion. At this point, halflings and dwarves both left the world for the feywyld, and the doppelgangers claimed their territory, keeping up the guise of halflings and dwarves.
Several centuries passed, and the dwarves and halflings returned, but were split. Half returned to Duska Krak, rejoining the ancient nation, though now unknowingly under their doppelganger leaders. The other half became the nation of Kraka Kalafi (which I am frequently mistyping as Kalafi Krak).
As for Kraka Kalafi, it has pretty much lived an idylic life on it's islands, with little contact with outsiders, since it's inception. For their inception, they only worshipper Ejra, losing all access to divine magic when she perished. Veros recently reminded them of the long forgotten worship of him, and restored their divine magic.
Duska Krak, after the return, drove humites out of the Golden Hills into the north. In the only battle that resulted from this, a small force of dwarves and doppels, lead by a doppel wizard were slaughtered by humites and treants. Veros experimentally returned them to life as vampires. Unable to control the bloodlust from their initial birth, they slaughtered the humite village almost to the man, before fleeing to the north, seeking a dwarven stronghold long abanadoned after it's fall to frost giants at the end of the war (I beleive the frost giants that brought this fortress low became the worshippers of Mara). A few centuries after the exile of the humites, normal relations resumed between them and Duska Krak.
Duska Krak remained a fairly normal place for a while, until the vampire lord Drevan finally decided to have his revenge on the nation that had ordered him into battle underprepared and outmanned. In a week of brutal slaughter, he and his vampire hordes brought the ancient nation low, and he eventually reach Duska Krak's capital of Celeros where he activated a ritual which would have destroyed Duska Krak entirely.
Veros, having come to see what was going on, pulled Duska Krak and all of it's dead and dying citizens out of existence, returning them several years later to a floating continent in the inner world, where they were placed under a Spell of Preservation.