Story Background:
1.) History
When the Blue Mountains broke apart and the Dwarf-city of Nogrod collapsed, Dwarves escaped to lesser dwellings, and eventually many went east to Moria, and arrived there around SA 40.
Early in the Second Age, most of the Noldor and many of the Sindar went West, establishing the new city of Avallónë on Tol Eressëa. Many of the Sindar that remained in Middle-earth went east and joined the Silvan Elves in their scattered woodland dwellings.
The Noldor moved to the land west of the Ered Luin, which had once been known as Lindon. After the Gulf of Lhûn was formed, the two portions of Lindon were named Forlindon (North Lindon), in which Gil-galad ruled; and Harlindon (South Lindon), in which Círdan ruled.
Celebrimbor moved from Lindon east into Eriador with many Noldor, reaching Eregion (Hollin), and founding Ost-in-Edhil. Close friendship grew between the Dwarves in Moria and the Noldor of Eregion until the War of the Elves and Sauron.
When Sauron established his dwelling in Mordor because of his fear of the growing power of the Númenóreans and their increasing presence in Middle-earth, he began to seek after the elves. He was refused entrance by Gil-galad into Lindon, but was received by the Elven-smiths at Eregion, where the rings of power were begun around SA 1500. Celebrimbor created the three greatest rings (Narya, Nenya, and Vilya) alone, finishing them in SA 1590. Around SA 1600, Sauron forged the Master Ring, but his deceptions were revealed and the War of the Elves and Sauron began.
Sauron invaded Eriador and attacked Eregion in SA 1695, and though Elrond was sent to aid the elves in Ost-in-Edhil, Eregion was destroyed, with Celebrimbor killed, before he reached it in 1697. The Dwarves of Khazad-dûm and the Silvan Elves of Lórinand (Lorien) aided Elrond’s forces in fending off Sauron’s forces, but they were forced to retreat, and the gates of Moria were shut.
Elrond went north, escaping with the remaining Noldor, and built Imladris. But by SA 1699, Sauron had overrun Eriador, and Rivendell (Imladris) was besieged, Sauron declaring himself “Lord of the Earth”. Númenor came to the aid of Middle-earth, a huge fleet sent by Tar-Minastir joined forces with the elves at Lindon to drive Sauron out of Eriador.
Concerning Moria: When Morgoth was thrust through the Door of Night, his few creatures that survived his destruction scattered. Among these was the only Balrog mentioned in later times: the one who escaped to Moria, and was discovered there by the dwarves in the Third Age.
2.) Geography
Eregion was located between the Glanduin and Bruinen Rivers in Southeastern Eriador to the west of the Misty Mountains near the West gate of Moria. Many holly trees grew there, its name meaning “holly-region” in Sindar. Imladris is located north and slightly east of Eregion, in a hidden valley just outside the north east corner of the Angle (the land between the Mitheithel and the Bruinen) amidst estuaries of the River Bruinen, also known as the Loudwater.
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MAP of game area
Ost-in-Edhil