OP here, here's some of my half-baked flavortext for the world.
Demons are a pervasive force in the world. Diabolists, likewise, are very powerful; I picture them as these sort of death-cult rockstars, a charisma-based magician with a sacrificial knife and glittering red robes, surrounded by fawning servants who practically trip over eachother to be killed in his glory. In return for these blood offerings he can shoot bolts of corruptive fire, wrench demonic minions from the ‘nether, cause enemies to suddenly combust and burn to death, etc. This is important because elves are diabolists as often as they are bards/songmages.
Elves were the first race, the most beloved of the world’s creator. And, as Its chosen, they had some great duty here: to protect a given place, to remember a sacred song, prepare for a foretold event, or perhaps even just to abstain from a particular apple-of-knoweldge sin. I’m not sure about the details yet.
What I do know is that elven history is a bloody web of passion, vice, grudges, glory, hubris and betrayal (again, somewhat influenced by The Silmarillion). They’ve had one hell of a run on this earth, but ultimately, they failed. They have betrayed, forgotten, or fallen short of whatever their duty here was. The elves have accepted this and have turned their back on the world. They can no longer reproduce. They take no action in the world at large. They merely drown themselves in decadence and committing their souls to song.