History
During the Great Fiend War, Devils raided the world and used Demons as their hunting dogs. This devastated a lot of the world until the gods stepped in to put a stop to their rampage. However, many women had been impregnated by the hordes and a few other humanoids had struck pacts with their Devil overlords for a better portion of the hell on earth that befell the races. The women who were pregnant (even the impregnated female Demons and Devils) found themselves cast out or tortured. Many did what they could to survive and others still blamed the child they were carrying and did horrifying things to them. The Touched that were born found themselves in a truly unforgiving world. Most of them were homeless and treated as less than criminals even when they had done nothing.
This left a brand new race with seething hatred for the families that should have loved them and many of them did unthinkable things that didn't help the animosity that most people felt for them. This had nearly caused the race to become extinct, however, Devils still struck contracts and Demons still had their insatiable hunger. No matter how many Touched were slaughtered there were still more as greed or desperation befell those who turned to Fiends for help.
The races of the world begin to realize that the Touched were here to stay, so in striking a 'deal' they sent the Touched to live on an island to themselves, but it was soon realized that this island could not withstand the number of individuals that came to live there. The more that the Touched begged for better living conditions, the more that the other races refused. So in an effort to make things better, the Touched began to branch out toward the mountains and were met by Half-Dragon clans that already lived there. This became a bitter war between the two races that lasted for generations.
It wasn't until over a hundred years passed that the two races had come to a shaky truce to reduce the numbers that had already perished. This had been facilitated by the High Elves who invoked their own contracts with Humans, forcing them to give the Touched enough land of their own to live. The Humans, however, could no longer force the Touched to live in the land provided any longer, and thus the Touched had also begun to multiply in Human cities, becoming more accepted as a race, though only just.