According to legend, the realm was once the domain of a forgotten Daedric Prince who earned Dagon's wrath. In response, Dagon made war upon the Prince, destroying his home. Nothing remained of his realm but a shattered fragment, a place illuminated only by a green, ghostly aurora. The realm possess a ruined keep, which stood beneath a starless sky. The plane itself is devoid of life and energy, which is unusual for a realm of Oblivion. The surrounding landscape consists of jagged stone peaks, dotted with lightning rods and flora typical of the Deadlands such as bloodgrass.
At some point, a member of the Gleaners of Aurbis named Hrofald of the Three Jests acquired a key that could open the forgotten Daedric portal daises scattered across the Deadlands. He explored the many locations and realms linked to this forgotten portal network, until one day he disappeared into a portal and never returned. Presumed dead by his fellow Gleaners in Fargrave, Hrofald had actually stumbled upon the entrance to Deadlight. However, the key he had used to enter became discharged, and the realm lacked the essential energies needed to recharge the device. As a result, Hrofald became trapped in the realm for many long years, slowly withering away. It is unknown how he survived in this dead realm, although it has been speculated that the rate of his starvation may have been slowed by the realm's total absence of light and life.
During the Interregnum in the mid-Second Era, Mehrunes Dagon gifted the realm to the Order of the Waking Flame to serve as a demonstration of his power. Hrofald managed to escape when a Dremora opened a portal to present the realm to a member of the Waking Flame cult, and he eventually made his way back to Fargrave as an old and broken man to tell the tale of the "plane of the dead lights".
The Waking Flame subsequently built a citadel in Deadlight to serve as their stronghold. Many Waking Flame cultists came to the realm during this time, along with their Daedric guardians. The Citadel of Deadlight was used by the cult as a temple, novitiate, and headquarters. For a time, the Deadlight Citadel served as the home of Sister Celdina (one of the Waking Flame leaders) and her daughter Mairead (one of the Four Ambitions). Mairead eventually fled the realm, unwilling to be sacrificed to Dagon.
Circa 2E 582, Sister Celdina and the Waking Flame were forced to retreat to Deadlight after they were driven from Fort Grief by the Vestige. Fearing betrayal from her former ally Valkynaz Nokvroz, Celdina severed all portals to the realm bar the Western Gate. She placed a powerful ward on the Western Gate portal dais, preventing any Daedra from entering the realm. She planned for Deadlight to serve its final purpose as an impregnable retreat until her moment of victory, namely the creation of an army of Incarnates to serve Mehrunes Dagon. However, the Vestige and Mairead managed to enter the realm and defeated Celdina in combat. Valkynaz Nokvroz and his forces subsequently broke through the ward and entered the realm in force, kidnapping Mairead. Celdina's death displaced the Waking Flame as the favored servants of Dagon, allowing Nokvroz to assume control of the creation of Incarnates. Nokvroz too was eventually defeated by the Vestige, ending the threat of the Incarnates.