Shwe Tu Colony, properly known as the Demon Empire's Colony of Parufhmerie, is a colony of Parfuhmerie, which is itself a colony of the sprawling Demon Empire, a civilization of demons that inhabits Sheogh in the world of Ashan & has numerous colonies throughout the various regions of the currently unnamed world of Parfuhmeire. While the empire is ruled by the mighty Demon Sovereign, also known as Kha-Beleth, he permits a great amount of autonomy to his colonies in order to keep them loyal. On the other hand, he uses fear & any other such methods at his disposal in order to keep his own Ashan demons — the far more finicky variant of demons — in line.
In comparison to the canonical Ubisoft continuum, Parfuhmerie's story begins following the "Dark Messiah", in which case the Demon Messiah Sareth decides to not permanently free his father Kha-Beleth using the Skull of Shadows. As a result, the demons are not able to leak into the world of Ashan & are only capable of exiting their prison during the Lunar Eclipses (also known as the Bloodmoon Eclipses) or when summoned. However, this passing period before the seventh eclipse was a unique one: this time, a curious Dwarvern mage from the Shurmian Region created a portal in a passageway that, unbeknownst to him, was filled with Chao crystals.
Naturally, Kha-Beleth opened an expedition for demons to investigate this new portal, led by the half demon adventurer D'artego. After exiting through the portal, they would walk through the winding passageways that were laden with the Chao crystals, this path soon being named the Fiend's Crossroads. As a result, their minds were changed: now, they were ironically far more docile & less chaotic than their brethren back in the world of Ashan, leading to great surprise on the Demon Sovereign's part when D'artego & a group of the colonist demons returned, now noticeably less violent.
Following this, the demons would quickly found the colonies of Canritola, Parfuhmerie, & Ai'Bua in the Thallian, Thryllasian, & Shurmian regions respectively. Later, a sorcerer in Canritola, alongside a Jungian shadow of a prominent warlord, would be captured & fused in the disastrous experiment at Aknal Island, birthing future Parfuhmerian Head of Economics Sekka Verndara & his cousin the Chao Massacre Tenebrae Verndara. Later on, the experiment would awaken the sentient basket-hilted sword Heartshatter — a normal weapon which was enchanted by sheer emotion — & soon thereafter the Derlia Infection would also awaken from Heartshatter's creation.
So in other words, the whole thing started because of Kha-Beleth's plan backfiring. While unfortunate in the short term, Kha-Beleth's inability to conquer Ashan & the Silver Cities meant that there would still be wizards & scholars interested in founding Psytronius, who as we know have developed the usage of magic for extraordinary purposes. Thanks to Kha-Beleth's wishes for his colonies' loyalty, he does not require of them to assist him during Bloodmoon Eclipses (although he still greatly suggests it) due to some existing friendships with Ashan surface cities that may be ruined by going to war with them. However, the prosperity from the colonies is still used by Kha-Beleth, who keeps his sources intentionally ambiguous to prevent ruining colonist relationships with Ashan cities. While most certainly evil, Kha-Beleth is not foolish.
Seeing how the world of Parfuhmerie & Shwe Tu Colony might be rather unique to most other civilizations, Sekka Verndara opened a Q&A before this one, but that promptly failed. As such, this is a sekond attempt on his part for a Q&A,