The Great Fall:
The Great Fall is the name given to the climactic event in which the gods and daedra lords were stripped of their power and forced to walk the Earth alongside mortals. This happened in May 708 C.R., when the gods engineered a final conflict with the daedra lords that they believed would give them uncontested rule over humanity. The key weapon in this conflict was the Starchild, Merai hin'Dana, a mortal whom the gods had shaped from the womb and given the ability to channel and transmute divine energies. After being filled with a measure of the gods' own power, Merai was supposed to use this gifting to steal the power of the daedra lords, transmuting it into a neutral form that could then be fed back to the gods. In this way, the gods hoped to circumvent the ancient restrictions that their progenitors, the Elders, had placed upon them, which bound the deities to their respective spheres of influence and kept them from taking power from each other.
To the surprise of all present, however, Merai did not do as the gods had bidden, for she had received alternate instructions from Iluvatar in a vision. After siphoning off the power of the daedra lords, trapping them in corporeal form, she betrayed the gods and did the same thing to them. Knowing that the pantheon's lesser offspring would probably use their masters' downfall to seize the power of the Heavens and Hells for themselves, Merai opened these outer planes and cast all of their inhabitants into the Dreamlands, an infinite landscape shaped by the imaginations of mortal beings. She then shattered the Axis, the conduit through which the deities and their children could travel among the outer planes, thereby cutting off the Heavens and Hells so that no one could tap into their power. Finally, she channeled the pantheon's divine power into Metamor Keep, entrusting it to the care of Kyia.
Merai was unable to take all the power from the members of the pantheon: even trapped in corporeal form, they were gifted with supernatural abilities that made them stronger than any single mortal wizard (though some Elven master wizards and a few of the White battlemages of the Southlands came close). However, they now had to eat, drink, and sleep like mortals, and while they would never age or grow ill, they could be killed. What no one fully understood until the death of Lilith, however, was that anyone who took the life of one of the deities would also take their divine essence, replacing them in the pantheon. This discovery set off a host of ambitious assassination attempts on the members of the pantheon, most of which ended in failure.
The Meraist Church teaches that the Great Fall was Eli's act of judgment upon the pantheon, punishing them for their arrogance in setting themselves up as objects of worship. However, it was also an act of mercy -- for, rather than destroying them, Eli forced the deities to walk among the people who had worshiped them, so that they might learn humility and compassion by experiencing the joys and trials of mortal life. Today the Meraists pay respect to the fallen deities as moral teachers, walking object lessons to teach mortals of the difference between good and evil, light and dark. Even the daedra lords are accorded this respect, for we would never know the true nature of light unless there were darkness to which we might compare it; in this way, the daedra stand as a monument to free will and the mortal's right to choose.
The Great Fall's effects were dramatic and wide-ranging. In addition to leading to the creation of the Meraist Church, it precipitated the reformation of the Lothanasi. Also, for reasons only Iluvatar knows, the Great Fall removed the long-standing immunity of Followers to the daedra's influence. Thus, while the pantheon was greatly weakened in power, the Ecclesia could no longer ignore their presence -- as was amply demonstrated when Klepnos turned an entire assembly of Ecclesia priests into chickens.