Great Calamity

The Great Calamity (大災厄 Daisaiyaku) is the name given to the series of events occurring approximately 400 years before Natsuki Subaru's arrival in the new world, when the Witch of Envy laid waste to half of the world. After untold casualties and chaos, a group composed of the Sage, the first-generation Sword Saint and the Divine Dragon, set forth to end the Witch of Envy's rampage. In the end, the Witch was sealed in eastern Lugunica. It is the paramount event of the Re:Zero world.

Background
The seven Witches of Sin known today were not always Witches (Except for Echidna, who was born a Witch), as there have been many others in the past, of which there is very little information about. The Witch Factors that grant the Witches their Authorities are inherited, and as always, inherited abilities require some degree of compatibility with the user to ensure control over their powers. A half-elf named Satella made friends with the Witches of Sin during the era, minus the Witch of Greed. However, one day she came in contact with the Witch Factor of Envy with which she was horribly incompatible. As a result, she developed a separate personality as an extension of her Authority - the Witch of Envy. Although it is unknown if the power of Satella's Witch Factor instantly created the separate personality or if she exerted a level of control over it, she nonetheless wrought havoc to the world in a disaster which eventually became known as the Great Calamity.

Calamitous Event of Great Proportions
According to records around the time, the Witch of Envy's rampage flattened, salted, and scorched half of the world. Naturally, destroying the world did not contribute to Satella and the Witch's reputation, and her name would forever be remembered as an ultimate evil in the world. It is hard to grasp the scale of the destruction.

Eventually, a group of heroes, not wishing to see the world end, took up the cause to end Satella's reign of destruction once and for all. The heroes, who may or may not have been exclusively Lugunican but ended up associated with the Kingdom anyways, were the Sage, Flugel, the first Sword Saint, Reid Astrea, and the Divine Dragon, Volcanica. With their powers combined, they still failed to kill Satella, instead resolving to seal her in the Evil Sealing Stone Shrine within the vast Augria Sand Dunes in eastern Lugunica. Satella, virtually immortal, would stay an ever present threat to the world. Foreseeing a possible scenario, Flugel decided to construct the Pleiades Watchtower in order to watch over the entire region to make sure nobody would get remotely close to the location of the sealed Witch.

Consequences
The Sage decided against taking recognition, granting his achievements to his apprentice and the other members of the group. In Lugunica, the Sage, the Sword Saint and the Divine Dragon are recognized for their contributions to saving the world.

In addition, the humans in the world (most notably, citizens of Lugunica) developed a prejudice for demi-humans, with elves being the most persecuted race. This subsequently led to the Demi-Human War, between an alliance compromised of demi-humans, and the Kingdom of Lugunica. The demi-humans were beaten, and people developed even more prejudice towards their race.