Inundation

600 years ago, the god Quasxthe brought the Inundation, a global flood. Over the course of 50 years, the land slowly sunk beneath the waves, leaving nothing but ocean. The Inundation sometimes refers to this the 50-year period of rising water; sometimes it also refers to the following 500-year period of global ocean.
The elves grew floating forest-cities from mangrove swamps, bringing as many natural specimens with them as they could. The gnomes and dwarves combined their expertise to build a fleet of submarines. The drow picked up and moved their entire civilization to the Deathly Plane of Shadow. Most other civilized races settled for old-fashioned ships, or one or two naturally-occurring floating islands. Many uncivilized races died out.
Humans settled the floating island of Shell. The gnomes and dwarves gradually interbred, giving rise to the race now known as engineers. On mercantile and pirate ships, every race interbred, giving rise to a great many mixedfolk. The pirate king Gus Dreadworm retired, mooring his fleet together; mixedfolk settled on these ships, and moored more to them, creating the floating mass that would come to be known as the Disreputable City.
50 years ago, two groups of adventurers -- Cofniben the Wizard, Morgram Crow the Swashbucker, Arossi the Cleric (since sainted), Sir Bucket the Bold (since coronated), and Saito the Scout first; Eleanor the Crusader, Scarecrow the Dragonborn, Doldor Wildheart the Druid, Namia Daydreamer Nagalupine the Goliath, Shian the Sparrow, Claudius the Engineer, and Aeyssa the Nymph 20 years later -- reversed the Inundation, in a 50-year event known as the Subsidence. The land and the ocean are now back to their original levels.