Dwarves:
Society falling into Chaos, as the dwarven dungeon masters have been possessed by the demons. Generally a noble, hardworking, loyal folk, that loyalty really isn't serving them well here. You'll be fighting a lot of them in the early game, either in friendly matches, to get by soldiers, or when infiltrating the Dungeons.
Elves:
Elves have always had a relatively unstable relationship with the dwarves, with off and on conflicts over the years, but their lands are technically part of the dwarven kingdoms. Many elves are fine with that (though many is pushing it, since there aren't exactly a whole ton of elves), but there's always been an undercurrent of desiring independence. Recently, thanks to the growing madness of the dungeon masters and the rise of a powerful Elven warlord, the simmering instability has turned into turned bloody and violent rebellion. Or severe annoyance. The problem is the elves are quite limited by their low numbers, and spend most of their time hiding in their forest retreat.
So : The western half of the continent is dwarves and elves, who are currently having a lot of infighting, the most organized of which is the Elven conflict. The elven team rocket analogue sees will oppose or attempt to manipulate the player depending on which seems most likely to yield elven independence, and they've got schemes going everywhere in attempt to achieve victory despite being outnumbered and outgunned by the dwarves.
This is the Early Conflict, and the elven separatists will continue their mission for the whole game, though the conflict will fade in importance.
Meanwhile, in the Eastern Kingdom, dominated by humans and specifically a single human city, Ironhand City, they are having their own internal strife. The king's rule has gotten particularly brutal, and a group calling it's the LCS has begun what amounts to terrorist activities in an attempt to build resentment against the king, overthrowing him and resulting in a superior government that will bring utopia. They are a bit fuzzy on how exactly that will happen or what form it would take, but it doesn't matter. An opposition group calling itself the ACL, or simply the Loyalists, has decided to bring the fight to them in support of structure, order, tradition, and history, all of which say opposition elements to the kind get crushed.
The King considers both groups annoyances, and mostly ignores them,. though they have been causing more property damage and trouble as of late. He wants them gone so he can get back to the joys of torturing people and planning his invasion of the dwarven lands. He's especially desirous of the Elven forests, which he could clear cut and turn into more ships for his ever expanding fleet.
Meanwhile meanwhile, the normally ill organized goblin villages of the northern desert have been united under a new leader, the Goblin Chieftain, who has been chosen by a supernatural being to lead them to supremacy. He builds their jealousy of the southern kingdoms with their verdant lands and rich resources and happy citizens, and works them into a fervor with the intent of invading and declaring himself ruler of all.
Every single one of these leaders is being manipulated by the demons, some moreso than others, and eliminating the demonic influence will give the lands a chance of peace.