Gwendolyn didn’t set out to cause trouble but found the restrictions surrounding being monarch suffocating. She sought love - on other dimensions and with other species, including humans. She left partners - with devastating consequences when one, and their child, went over to the dark side. The Chief Witch, who was that child, do have a genuine complaint against the late ruler. Gwendolyn set up the Council system to help her govern the realm, which made it easier for her to go travelling, but eventually they turned against her and arranged her death by conveniently placed dragon. She is the example of what not to do.
Why the Kingdom exists...
The Kingdom came into existence the moment evil entered the universe. Evil encourages evil creatures. Where evil exists good needs to counteract it. And the Kingdom is as split between good and evil as any other universe including our own. The use of power and influence is split equally too. The magical realm, led by the fairies, is generally proud that it can and does rein evil in though it usually has to do so by physical fighting. The fairies’ argument is if they didn’t do this, well an evil magical world is not exactly something you want able to wreak havoc everywhere. Eileen is not entirely happy with this attitude, believing in itself this covers up a lot of evil. Eileen feels that where reconciliation is a possibility, it should be pursued. Despite her own marvellous fighting pedigree, Eileen and to a lesser extent Fresdian are the nearest the realm gets to pacifists.
The Kingdom's internal wars...
Almost all of the Kingdom’s internal wars have been effectively property disputes. Dwarves digging out mines in areas already occupied by the above ground species. Above ground species forcing the dwarves out (by killing those “stupid” enough to resist - kill enough dwarves and the rest get the message). Witches and wizards wanting to carve out greater areas for themselves and their allies have caused wars. And ultimately the fairies, especially the royals, in an attempt to restore any kind of order used much magical force to do so. Maybe the reason the magical species here despise humanity is they know that only magic is the thing that separates us. They like to consider themselves better than humans but they’re not.