Some time ago I found an awesome timeline of Final Fantasy universe on the net, written by a guy named James M. Thank you James (whoever you are) for starting it. This here is my heavily edited and expanded version which includes all the Final Fantasy games. First of all, let me say it probably isn't true, because developers themselves didn't have any intention of weaving it together into one big story like this. But let's have some fun, because why not? ^_^
I'm dividing the known history of the universe into three chapters.
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A) TERRA with two moons:
1 ---> 2 ---> 3 ---> 4
In the first chapter of Final Fantasy (known as the ORPHAN ERA), we get to see bits and pieces of how it all began and witness the chaos that ensued. We don't learn all of this directly but it can be read between the lines: why people of Cetra arrived to Terra, how they brought crystals and magic to this world, and why they eventually left.
B) TERRA with one moon:
12 (+ Last Remnant?) ---> Spirits Within ---> 8 ---> 10
Even though Cetras were gone, magic was not. Remnants of old powers and shattered crystals were hidden throughout the world as Terra continued to struggle. The second chapter will be known as the WANDERER ERA.
C) GAIA:
5 ---> 9 ---> 6 ---> 7
While Terrans tried to cope with the chaos left behind, Cetras found themselves a new home - planet Gaia. This started the third chapter, also known as the MAGICIAN ERA.
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Now, on to details. Long, LONG time ago, a planet between Mars and Jupiter is engulfed in war. One of the races coexisting on the planet are Cetra. They are physically similar to humans but their lifespan is much longer. They predict the destruction of their planet is inevitable, and decide to flee before it happens. They take their powerful artifacts and travel to Earth (which they call Terra) but find humans already occupy it. Terran civilization is still too primitive to interfere with, and not all Cetra agree on how the situation should be dealt with. They influence the planet to some extent (becoming known as Lunarians) before they decide to go into a long sleep on the asteroid-like vessel they used to travel here, which is now orbiting Terra as its second moon.
Zemus, an especially powerful Cetra, manages to wake up earlier, and decides to establish himself as the ruler of Terra before other Cetra wake up. He comes down to Terra, bringing three orbs (perfect crystals) of light, dark, and time. He introduces magic to Terra, summons fiends and other monsters. He secretly constructs the tower known as Mirage tower or Babil, using the orbs to connect it with Terra's lifestream. Through manipulation and deception Zemus gets Lufenians and other humans to join in his efforts (many of them learn magic as well). In his great thirst for power however, Zemus underestimates human potential to wield magic and summon Espers. Terrans eventually turn against him. Another powerful Cetra called Fusoya wakes up and helps humans in the fight against Zemus. The tower of Babil is breached and his orbs of light and dark are shattered into four pieces of crystal each (representing fire, ice, water and earth). The dark crystals wind up scattered underground while the four light crystals are scattered above ground. Fusoya captures Zemus and imprisons him on the Red Moon, then continues to guard the Cetra people in their sleep.
The events of Final Fantasy II and III occur in the decades and centuries that follow.
400 years after imprisoning Zemus, events of Final Fantasy I are about to transpire. Even though he is restrained, Zemus continues to scheme and influence Terra by using mind control time and again. Zemus uses an especially powerful mind control on Garland, the princess's faithful bodyguard. The new Garland then captures Princess Sarah, a great summoner, and brings her to the orb of time, so that Zemus can extract the power from her and possibly break from his prison.
Garland is confronted by Warriors of Light (a band of heroes investigating the darkening of light crystals) but even though they think they kill him, he actually uses the orb of time to escape 2000 years into the past, to a time before Cetra even arrived. This unexpectedly causes the consciousness/spirit of Zemus to be split in two. The one in the past fears his suddenly shortened life span, becoming obsessed with his own mortality. He also fears using the orb of time to travel back - what would it do to him next time? He is Zemus, but he's not Zemus; he is Garland, but he's not Garland. The only sure thing is - he doesn't want to cease to exist. He devises a plan, summoning four fiends and sending them into the future. The fiends darken the four light crystals and open a time portal for him to feed on this energy. Fiends cause the Warriors of Light to emerge, who in turn defeat Garland and so a time loop is created, allowing Garland to become immortal. Through this constant flow of dark energy he transforms into a being named Chaos. In the end Warriors of Light find a way to travel back through the portal and confront him once more, defeating him for good and breaking the time loop.
This results in erasing the darkening of crystals (as well as emergence of Warriors of Light, and other events in Final Fantasy I) from history - as far as everyone is concerned none of it ever happened. The whole last paragraph = poof! This didn't affect what Zemus has done though - when using the orb of time while mind controlling Garland, a part of his consciousness stayed trapped within it. This prevents Zemus from uniting his consciousness ever again - he is unable to make himself whole. Garland is trapped in the orb of time, and Zemus is severely weakened.
The events that follow are described in FF IV, where Zemus continues to scheme. Unsuccessfully, as he is finally defeated, once again with the help . Cetra who are awake realize they have caused a lot of harm to this once peaceful planet. They decide to leave Terra forever and find a new planet to colonize. They use the Red Moon orbiting Terra as a mean of transport once again, leaving Terra with only one moon. They find Gaia and settle there, this time landing their vessel instead of leaving it in the orbit. The orb of time is left behind on Terra and forgotten.
In the future, FF V happens on Gaia (followed by anime Legend of the Crystals 200 years later).
On Terra, FF XII and later Last Remnant happen. Magic begins to fade (as seen in the ending of Last Remnant) and monsters and dragons begin to disappear. Thousands of years pass and we arrive at present day Earth. There is no magic or monsters, the world is as it is today... but the ghosts of the alien Cetra planet so long ago destroyed return to haunt our world. Tortured spirits unable to return to their planet's lifestream arrive through an actual asteroid (in reality a chunk of the planet that broke off in the destruction). This new threat almost exterminates the human race on Earth. Events of the movie Spirits Within occur here.
And so it happens that foreign magic is brought to our world in a post-apocalyptic future. After absorbing the alien spirits into Terra's lifestream, people gradually learn how to summon Guardian forces (Espers) and use magic by tapping into the planet's lifestream directly. The events of FF VIII occur centuries later. Queen Ultimecia manages to find the long lost orb of time and attempts to harness its powers. She is defeated and the orb of time is finally shattered.
Garland is free and he learns of Gaia, a young thriving planet that had been colonized by the Cetras many thousands of years earlier. As the events of FF IX describe, his attempt to merge the two planets and exact his revenge on the Cetra fails, and he is killed.
Centuries pass and both Terra and Gaia go through fundamental changes. Events of the past are now myths and tales; people no longer remember the Terran high-tech civilization that preceded, or if they do - they fear the technology that brought about it's doom. FF X and FF X-2 occur on Terra (now known as Spira). These major and world-changing events will be remembered as the War of the Magi. During this period (or soon after), a gifted Terran engineer named Shinra conceives and masters space travel. Following this revolutionary technological leap forward, many Terrans leave the planet and settle on Gaia.
Some time after Terrans arrived in great numbers, Jenova lands on Gaia, having traveled through space on a meteor. She approaches the Cetra, using her mimic abilities to glean the memories and emotions of the Cetra. Victims of Jenova are infected with Jenova's cells and mutated into monsters. Quickly, Jenova is able to destroy most of the Cetra civilization. The Terran immigrants, who now called Gaia their home, hid from Jenova while the Cetra were nearly wiped out. The few surviving Cetra band together to defeat Jenova and quarantine her inside the Northern Crater.
Survivors start rebuilding towns and cities, in time becoming an industrialized civilization fearing magic. Espers are now forbidden from being summoned and magicite (the form they take after 'death'), known to be a source of powerful magic, is hidden, destroyed or forgotten. The events of FF VI occur here (one thousand years after the War of the Magi), and the world is almost completely destroyed in another war. After that, the Espers are freed from magicite and live peacefully on the moon.
Time passes and the world changes once again. People learn to store magical powers from the lifestream into materia which is used to power advanced technology. Materia is very similar to magicite in terms of it's properties: it is widely tested and soon utilised in order to use magic and summon powerful beings living on the moon.
By now ancient history is very much forgotten and Terrans greatly outnumber all other self-aware lifeforms on Gaia. They discover Jenova (she was dormant for two thousand years) and start researching her potential.
About 50 years later, Crisis Core and FF VII happen. Once again the world is nearly destroyed, this time by a giant meteor, but Aeris (the last living Cetra) manages to cast the final summoning from beyond the grave, stops the meteor, and all materia is shattered and returned to the lifestream. The events of Advent Children and Dirge of Cerberus occur soon after.
The secret ending of FFVII gives a glimpse on how Gaia will look 500 years later. Shinra's motionless symbols of dead splendor are ancient ruins hidden in the green wilderness that now covers a healthy, completely renewed planet. Hoorah!
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What's next? Who knows.
Probably something that makes this timeline completely false :D