This might have changed since lore in the Divinity universe is inconsistent, but here's the original idea:
Zizzax: Clorex zibrib. Listen now. I start from beginning. All this world made by the Gods in the time before there was death. They make trees, flowers, animals, rocks and all sorts...
Lucian: That I could have guessed. What good are the Gods if they didn't make everything to start with?
Zizzax: Ziggurunt meggrax! Shut up and listen! One of the Gods, called himself Lord of Chaos. He broke the rules and made intelligent creatures to be his slaves. He called them demons, and that succubus you killed is being an excellent example. Zix zzix!
Lucian: So demons were the first intelligent race?
Zizzax: Soodix. Yes, indeed. They the oldest and be hating the newcomers as they call all the rest like you and me. Other Gods got angry at Lord of Chaos and tried to kill the demons. But that not work so Gods made their own intelligent races to fight by them - elves, humans, orcs, imps, dwarves, trolls, lizards... all of us who not demons, in fact. Understand?
Lucian: I remember my mother telling me stories about the Gods, but I never heard this...
Zizzax: Zickoid! This long-buried history. Soon it became clear that even with little mortal helpers to fight Lord of Chaos and his demons, good Gods still going to lose. So good Gods decide to play dirty. They left this physical world forever and this sucked old Chaos Lord along with them. But he got stuck between the spirit and physical plane. There he trapped and place called Hell grew around him. Understand?
Lucian: Not exactly...
Zizzax: Hrootix! Good, at least you paying attention. Nobody really understands what happened to old Chaos. Now listen to more. Mortal races eventually kill all the demons. All demons go down to hell to play with big bad Lord of Chaos, ha ha. But sometimes demons find ways to come back to Land of the Living. Possess minds and tear-up innocent people. So good Gods, who now live only in spirit-world, choose certain mortals to become champions against evil...
