Small bits of lore before Dark Arisen II makes them all a bit more or less correct

Pawns

Pawns are created by Arisen in different worlds. Each time you make a pawn, it is "born" with your Arisen's language skills, but they then jump into rifts to be summoned by other arisen to help their worlds. Pawns can also freely exit rift crystals to travel solo in any iteration of the world they'd like to visit, but do not cooperate and do not make changes to the fate of the world- the Arisen alone gets that duty, and pawns (with no real will of their own) mostly seek out an arisen, or fight monsters to show their skills to an arisen.

My understanding is that pawns gathered around rift crystals prior to the arisen's appearance. They fight monsters but don't interact with people in any meaningful way, so you have military bases and towns built around rift crystals, because the pawns naturally fight off monsters that would otherwise be problematic. Some villages like Harve do not have any walls or defenses because a rift crystal is at the entrance, and therefore pawns will do the heavy lifting for the village.

Once the arisen is named, pawns head out onto the roads, hoping to be adopted by an Arisen. "I say "an" for more than one reason.

Former Arisen

The world has one Arisen and one dragon at the time. Neither of those statements are true, but both of those statements are true.

An Arisen is chosen by the dragon. Their heart is taken out, and they're given the job of fighting and killing the dragon to retrieve it. Most Arisen fail for one reason or another- if you see someone in a vocation that a pawn cannot have... they're probably an arisen.

This means Luz, Lamond, and Sigurd (probably in that order given their ages) are all failed Arisen. The world does not end when an Arisen fails, it just sucks a little more every time. It's unclear why they failed. The last one to succeed was someone in Disa's family line, likely before Luz. The only former Arisen I can think of that doesn't come with a class is the old man in Harve Village.

As for how they failed, it's unclear.

Sigurd likely lost the fight with the dragon. I would argue Lamond probably surrendered his beloved to the dragon so he wouldn't have to fight, and I'm unsure what happened to Luz. Either way, by being unable or unwilling to kill the dragon, their title was revoked, their pawn returned to the rift (probably, unless Dark Arisen II states differently). The dragon then raided another village and took the heart of the bravest idiot in that village as well.

The only exception is the old man by the sea in Harve Village. He killed the dragon and himself, unleashing the unmoored world, but he died there. He was then sent back in time to gaze out at the sea he couldn't cross, waiting for another Arisen to make it that little bit further than he could make it.

The Dragon

The dragon exists to appoint a new arisen. When the dragon is slain, the story "ends" and the world goes through an era of peace and prosperity. It is unclear where dragons come from, but it seems as though they aren't related to Arisen or Pawns, they may be inventions of the Pathfinder to try to reinforce an eternal story on this particular island, inescapable and surrounded by brine.

Dragonsplague is generated by the dragon, infecting pawns with free will. They stop obeying their masters' orders, and if given absolute free reign, they'll destroy an entire town, wrecking the narrative. (of course in gameplay everyone just respawns after a few days so whatever). Pawns that develop their own free will even without the dragon develop dragonsplague symptoms, which culminates in turning into a black dragon-like thing. In that regard, while drakes (under the command of the main dragon) can teach pawns free will (and therefore give them dragonsplague), they can just get it on their own as well (though not in gameplay). A pawn's natural eye color is red.

The Pathfinder

The administrator of the island DD2 takes place on. He is an enforcer of "the eternal will", a will to create a world with perpetual heroes and drama, from generation to generation. He's there to help the Arisen when possible to follow the script, slay the dragon, and become the next sovereign, which is what the successful arisen (aside from the old man in Harve Village) did in the past.

That's about all the deep lore I have in me right now. DD2 wikis suck so you have to search for this.