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The worst mistake of the gods was the creation of living things for their own vanity. Our magic is capable of creating biological machines, creatures with cognition on par with that of a computer. Thinking, yes, but only thinking in terms of how its task may be accomplished, with no higher emotion, feeling, or humanlike drive. The creation of people is one thing, beings like us who could populate the world and adapt should we prove too inflexible in our nature. If we had stopped there and not refined humanity to the point of perversion, then we would be of purer morals for that.
Elves were our second to last creation, before the Forge of Hours was lost. Unlike our last creation, the Valleymen, these beings were made for no practical purpose. Elves were made to be pretty, to flaunt that beauty in the face of lesser creations, and to appeal to the aesthetic sensibilities of the most perverse among us.
Should you have the misfortune of encountering one, do not trust them. They call all other lineages of man lesser, baser, or other demeaning terms. While they may pretend friendliness with you, it is only to attain a greater advantage. It is in their nature to scheme, lie, and value appearances over true character.
Elves are created in a tower which they have claimed in the far north. They do not understand its true purpose, but live there and worship it as if it were a god. Unlike Valleymen and other creations of the Hours, they are able to reproduce, thankfully in a limited capacity.
There are three castes of Elves in their society: Makers, Knights, and the lay Elves. Makers are the highest caste, the most prominent and oldest among them are known as Elders. Makers are the only ones with the privileged knowledge of how to make new Elves, and arts of healing unknown to all other peoples. When they permit a new family to procreate, a Maker is the one who determines the caste of the Elf to be. Then the new Elf, as yet unborn, is altered in the womb to fit that predefined caste.
Makers are given the means of casting healing magic. Knights are made to be strong. Lay Elves, those who work, are given minor alterations that align with their intended work. All elves, regardless of caste, are given a "perfect" form. Elves may be of any height, any color, any size and shape. As adults, they may even petition Makers to give them dramatic alterations to their body.
Only Knights are permitted to leave the North. In extreme situations may Makers leave the north, but only those who have not yet learned the secrets of how to make a new life. All who leave the North with intent to leave permanently are considered exiles. Elves who abandoned the strictures of their comfortable life in the north, in order to live among the other lineages of man.