After the last god was destroyed, the various living participants were scattered all over the world; this event came to be known some time later as the Split. Some of them, after wandering around for a few days, found their way to this spot; a prime location to build a settlement. It was at the border of some expansive grasslands, a forest, and a line of mountains. The mountains promised minerals for a future economy, the forest was full of food (animals and plants), and had a river running through it that came from the mountain (extremely fresh, since it's so close to the source mountain, but low on fish), and the plains area provided an easy place to build houses and to raise animals.
Over a period of about a month, some scattered beings migrated slowly to this spot, and started from scratch. Some had their weapons, and could use them to shape wood (thankfully, a few dwarven warriors sporting waraxes had showed up), while others struggled to create even the simplest of tools; animal bones for sewing needles, sharp rocks (sharpened against other rocks) for knives to fletch arrows, etc. but the going was hard without any metallurgy. A couple of the more industrious dwarves eventually managed to collect a sample of decent-grade iron from the nearby mountains (it wasn't easy; it took over a year without decent tools), set themselves up a furnace using simple stone, mud (to seal the holes), charcoal, and a battle fan (borrowed from one of the more exotic fighters), and managed to eventually produce a workable blacksmith's hammer by shaping the metal with the one dwarven battlehammer available. From there, the settlement managed to produce all manner of other things, and within a couple years, they had some permanent structures, and could produce almost anything they needed.
It has been a hundred years since the Split; the town of Monsbaiya now features a small city hall, a blacksmith (run by the same dwarf who forged the town's first hammer, though he is getting old now), a clothiery, and some farms. Most of the original settlers (who were warriors, remember) had trouble settling down to 'country' life; a few managed to make a decent living as hunters, but most chose to be explorers, to document the area surrounding their new home. However, it isn't easy; the world is a very large place, after all. The first Monsbaiyan explorers tried to follow the river, in hopes of finding the ocean, which would be another prime location for a settlement (due to trade potential)... and returned three years later to report that the coastline is actually a series of cliffs for miles in either direction. The Lutra river crosses overland for a considerable distance, and ends in a waterfall into the ocean. Despite being wide enough to carry a trading vessel, the Lutra river will not bring trade to Monsbaiya. The next group to explore along the river brought a scholarly elf with them, who was knowledgeable in geography... he determined that the odd formation (a waterfall into the ocean) is an anomaly; after a decent length of time, erosion would surely have created a shallower incline from the high river to the ocean. Thus, concluded the scholar, this portion of the world has not been like this for long.
The explorers have also searched beyond the mountains. They came back within a few weeks, with disheartening news; the expanse of flatlands beyond is nigh unnavigable. There are no hills, no trees, no structures; without astronomy, navigation is impossible, and the art of navigating by stars is yet unreliable after the Split. The explorers also noticed, while crossing the mountains, some extremely subtle vibrations; the Monsbaiyan miners have begun to notice these too, but cannot determine anything except that they are coming from "downwards".