You may assert that in the time before the coming of the humans, elves, and dwarfs roamed the lands, but that doesn’t tell you which parts of the land they stalk now, and why that makes sense. A handy tip is to run a board game simulation of the virtual world’s history that can provide the necessary explanations. Use what the simulation implies in the virtual world: Why this area has a sizeable minority population of dwarfs; why that area has ancient reptilian monuments; why in those areas the humans speak Elvish.
Just choose some existing board game that you think will work and use your own map. Half a day playing Diplomacy is fine if it gives you concrete reasons for why the elves ended up scattered to the four winds and the dwarfs remained stuck in their mountain redoubt.Designing Virtual Worlds Richard A. Bartle 2003