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Skullreich was originally the Second Morrigan Reich, another human nation wished to unify the entire world - not because they need resources, not because they seek for domination and power, but for their vision of a greater world without the reason to fight each other when everything is in common. This nation was located in the woods of the deep mountains, nourished by plentiful animals (but also dangerous Dark Forest monsters) in the wild and rich minerals in the mountains. With many years of development, they had the best industrial power in the world, aided with advanced technologies.
Yet since the new Kaiser Ludwig Wolff had risen to his throne, things had changed greatly in the Reich. The new Kaiser strongly opposed the vision of his ancestors, regarding that as "childish wish that are impossible to accompanish", and advocated the Morrigan Reich is the only righteous, superior empire of the world. He started the Great War that spanned across the entire continent, but ended up defeated by united forces of Empire of Humanity, Fallen Necro-Monarchs and Evangelists.
Morrigan Reich was abolished afterwards, the original territories divided by the Empire and the Fallen. However, the Kaiser was not found, not even his corpse. His disappearance remained mystery, until five years later the Bloodstorm Incident told everything happened just in the shadows - the Kaiser was corrupted Calamity, he traded his eternal service to Calamity Gods for dominating strength and a fanatic army. Since the Bloodstorm Incident, the once beautiful forests of the old Reich became charred woods that burns endlesssly, the once silent mountains became restless volcano, the once crystal clean rivers and lakes became bloody ponds nourishing Chaos creatures. A new evil nation raise from the ashes of the burning hell of death - the Skullreich.
By @GeneralWadaling