Arum-Khal's Realm was a dark plane of existence created by the dro-m'Athra lich Arum-Khal where only dark spirits could thrive. It resembled floating islands with glowing corals and ruined Khajiiti architecture hanging in a void of eternal twilight, reminiscent to that of the Dark Behind the World. It was destroyed circa 2E 582.
In the early First Era, the Temple of the Hidden Moons was built in Northern Elsweyr by the Hidden Moon adepts, devotees of Azurah who dedicated their souls to guarding the liminal barrier between Mundus and Oblivion and guiding Khajiiti souls to an afterlife in service to either Azurah or Namiira. At the time, worship of Azurah was prevalent among the Khajiit, and many therefore wished to join her in death in the Sands Behind the Stars. On the other hand, dark Khajiit who fell under the sway of Namiira would become corrupted spirits known as dro-m'Athra, and would need to be banished to the Dark Behind the World. The Hidden Moon adepts believed that Azurah watches over the Gates of the Crossing behind the Lunar Lattice, a twilight realm through which Khajiiti souls must pass in order to reach the afterlife. Arum-Khal was at one time a Hidden Moon adept, before he fell under Namiira's influence.
Out of his hatred for Azurah, and fearing a reunion with the souls of his people in death, Arum-Khal attempted to cheat death through the manipulation of his own soul, turning himself into a lich. Through his mastery of necromancy, Arum-Khal created an entire realm of existence to serve as his phylactery, rather than a simple object like most liches. He made portals to the realm by creating several physical phylacteries, orbs which he scattered throughout the temple complex. Many fellow adepts fell under his sway and began following his Way of the dro-m'Athra, causing the temple to plunge into civil war. Although the Hidden Moon were victorious, Arum-Khal would not die, and the battle sundered the temple and blighted the canyon below, creating a region which would become known as the Ashen Scar.
In its waning days, the Temple of the Hidden Moon spent all its efforts seeking ways to reach Arum-Khal and destroy him forever. They sought the blessings of Azurah and in return received the Moonlight Blade, into which an adept named Shando-ri placed his soul until such time as Arum-Khal was defeated. However, the remaining orbs of Arum-Khal were guarded by his Shades, tiny fragments of his soul which protected the orbs from destruction but could flee back to his realm if threatened. Despite their efforts, the adepts failed, and the temple was left to ruin for many centuries.
Circa 2E 582, a Khajiit named Malizaz came upon one of Arum-Khal's phylacteries and attempted to claim it for himself, but instead his soul was sent to this realm where Arum-Khal tore it to pieces. Arum-Khal then used the remnants to awaken his body, enabling him to return to Tamriel and visit death and horror upon the entirety of Elsweyr. Azura sent one of her devotees to investigate the ruins, a powerful undead necromancer named Vastarie who had only recently returned to the affairs of the living. By summoning the various spirits bound to the place, Vastarie and the Vestige learned of the danger posed by Arum-Khal's return. They were given the Moonlight Blade by the spirits, which was returned to pristine condition through the absorption of undead souls in the canyon below. By defeating Arum-Khal's Shades in battle before they could flee back to his realm, Azura's champions were able to smash many of Arum-Khal's phylacteries before facing his physical dro-m'Athra form in battle. In defeat, Arum-Khal once again fled to the safety of his realm, but this time was followed by the spirits of Shando-ri and the Vestige and destroyed. However, Arum-Khal had dealt Shando-ri's soul a terrible blow, making him too weak to return to the Moonlight Blade.
Due to the destruction of Arum-Khal's dark spirit, his realm was destabilized and began to collapse. The Vestige was forced to leave Shando-ri behind to escape, causing his soul to shatter. However, Vastarie then attempted a dangerous ritual to draw every speck of light from Arum-Khal's realm of darkness, and not only managed to reconstitute Shando-ri's spirit but also retrieved the remaining kernel of light from Arum-Khal's sundered soul. Fortunately, this redeemed version of him was no threat to Tamriel and was able to pass on to the Sands Behind the Stars alongside his fellow adepts.