The world's fucked! A Blight has came and the Grey Wardens failed. You can even make it the tutorial just to hammer in how truly fucked you are.
The world is now a Darkspawn infested hellscape, the few settlements where humans live are well hidden from the enemy and finding them is very hard since most fear betrayal from humans that prefere to serve the Darkspawn.
To top it off, there are Fade Rifts around the world, from which Spirits cross over and roam this world, though they never wander off from them since they need to return to the Fade every one in a while.
You can often find swamps where nothing lives because the Spirits kinda fuck up any animal or person that wanders nearby.
Mages are pretty fucking valuable as they happen to be the artillery that can defend these settlements from Darkspawn, since weapons and armor are rare now and risking your life is not a great deal either.
People still fear them being possessed (and it still happens) so Mages become distant leaders that rule settlements by fear, even if they would prefer to be loved by their people.
The Knights that used to hunt them are disbanded, their purpose made void by necessity, and they roam the land as mercenaries, but there are rumours there's a Brotherhood of Valiants that employs these Knights and Assassins to cull down Mages who abuse their powers.
The MC is some shmuck from a random town that is doing something stupid as usual, according to his back story. During his prologue, the game hints at possible alternatives you have to finish the game and then opens the world to you.
You can travel the world, visit every settlement, help them fight the local DarkSpawn and eventually secure the world. If you manage to gain leadership as well by any means, you can even become ruler of all known world when you win.
You can also read about the Grey Wardens and make it your mission to find their rituals, assembling their order again from scratch and even becoming one yourself.
This is entirely optional and you can miss it entirely if you don't actually go looking for it, but it does make it easier to defeat the Darkspawn.
Eventually, when you gather enough support and resources, you can have a fortress built somewhere in the map up to your choice. It's an upgradebale structure that gives you services and allows to coordinate whatever forces you end up recruiting, but needs to be defended from time to time unless you hide it with magic.
Settlements can be assisted and protected and you do need to do so or they can be entirely razed and lost. You can indeed reach a point where no settlement is left but your own citadel, at which point you can expect no reinforcements ever again, but you can still scour the world for ruins and knowledge.
Defeating the Archdemon isn't just about depleting his health bar, you'd have to divise a Plan. A plot engineered by you that can truly defeat him in combat, something that can be achieved in several different ways but requires looking around for information and then preparing things.
Plot A: The Demon Spawn from Morrigan can permanently kill the Archdemon. You can find this info on hidden crypts, after which you can being looking for the kid, now grown to a young man. You need to train him and keep him alive until the end, where he must be present in the final fight and if he dies before that, you'd have to try another Plot.
Plot B: A Grey Warden can sacrifice himself to kill the Archdemon. You need to find all of their rituals, spread across several locations, the required materials to perform them and people willing to accept it (option to hide the consequences and deal with them later).
You can do it yourself if you're a noble soul.
Plot C: A powerfull Spirit can drag creatures into Rifts back to the fade. If you can find a Rift big enough and convince a Spirit to assist you, the fight against the Archdemon can involve dragging him to the Fade when he is weakened and killing him there, trapping him in the Fade forever. (Grim ending, he now haunts the nightmares of everyone)