In 15,000 BCE, the ancient race of entities called Celestials visited Earth. The vast magical energies concentrating in such a small number of worlds and dimensions in such a short period of time attracted their interest. It was during one of these visits that a war party of Asgardian warriors attacked a Celestial, provoking an interstellar war.
A war host of Celestials attacked the Demiurge. Atlantean battle mages joined the New Gods and many allies in attempting to repel the Celestials. Weapons and magic of imaginative and terrible design were used to repel the Celestials. The Celestials pressed on and near the heart of the Demiurge. They prepared to trigger a doomsday weapon to collapse the entire galactic sector into a singularity. The Demiurge, finally roused to awareness of an actual threat to the Life Entity at its heart, obliterated the Celestials by overcoming them with the power of the Source channeled through the collected will of every god and mortal on Earth. The counterstroke crushed the Celestials and scattered them into the void.
Victory was won, but for a moment. When the Demiurge was at its very weakest, a spiteful and cruel Morgan le Fay found herself clutching the Cosmic Cube. It could have been used in that moment to save much of humanity. Instead, she wished for ultimate vengeance on Atlantis. The Cube cracked the boundaries of the universe held back by Merlyn and the Vishanti, and the dread Old God C'thulu emerged into the city of R'lyeh. The destruction of the seal on the universe proved to be the undoing of the Demiurge, causing it to revert to a pre-sentient state.
The result devastated Yggdrasil, the World Tree. The New Gods on the most distant edges of the tree became isolated and unable to commune with their followers. Those lands and dimensions most dependent on magic to sustain themselves were wracked by natural disasters. Asgard's magical defenses failed her and their weapons were rendered useless. The mighty Surtr invaded unopposed and destroyed the Golden City. The Nine Realms in particular were torn apart by war, and the population of the Aesir reduced to less than a hundred in total.
On Earth, the mighty nations of Atlantis were devastated. They were entirely dependent on magic in every aspect of their lives. Wells produced no water, crops withered, and entire cities crumbled. The mountains fell and the seas rose, and the world entered a brutal ice age called the Hyborean Era. Only the very mightiest of sorcerers were able to survive with the meager fraction of power remaining to them.