There are five elder races; jotun, mursaat, seer, dwarves, and the forgotten.
All five races banded together to defeat the Elder Dragons. One race betrayed them, the Mursaat. This betrayal consisted of them hiding from the other races. It is possible that they went underground to hide from the other races and this is when they learned how to hide themselves from the dragons. After 10,000 years underground their body size shrank due to the cramp spaces and limitations on food. Also all of the time caused them to forget their origins.
After the dragons went back to sleep there was a “Time of the Giants”, when the jotun (and Norn?) were the dominant races. The Jotun were divided into tribes and they began to focus only their own tribes. This isolation caused the civil war that led the Jotun into ruin. Over time the Jotun have become more grotesque due to inbreeding., but the did once appear very humanlike. Who is to say that the Norn was not just a name of one of the Jotun tribes? Maybe one that was not so isolationist.
The forgotten were chosen by the human gods to be the shepherds of the world after the dragon fell back into their slumber. Then humanity arrived and fought them almost to extinction and now they hide becoming forgotten to history. But, maybe the world needs shepherds. This is where the Sylvari come into play. Now we already know that the Sylvari were in some way created by Mordremoth, but not all of them ran off to join the dragon. Maybe these ones who remaind pure are the new shepherds of the world. They follow the teachings of peace as put down by Ventari and they are the ones who lead the Pact.
The dwarves have only removed themselves from the world more recently. They had been on the decline for years though prior to becoming stone. This one is kind of a stretch, mainly because there is not another race that could really replace the dwarves. The only comparisons I can draw on are the crafting abilities of both the Dwarves and the Charr. That is all I really have on that one.
Now the last. The Seers were the ones who created the Bloodstone to hide magic from the dragons and to cause them to go back into hibernation. Sometime after the dragons fell back into their slumber, the Mursaat and the Seers went to war. This war brought the Seers to the brink of extinction and they have never been able to recover. Seeing this gap created by the extintion of the Seers, the gods went off to find a new race to take their place. This is where the humans come in.
Now the gods are magical beings and since the dragons consume magic, they had to retreat to the mists and hide from them. The gods have had very little interaction with the world of Tyria since the event of Eye of the North.
So in summary, the Gods knew the dragons need to be defeated for life to thrive on Tyria. The last time they awoke the five races managed to fight them, but could not do enough to stop them and so they had to go into hiding. They brought together the best races they had available and retreated from the world.
This is just what I came up with after going through the lore. Let me know what you think.
