BAD GUYS
Q. Where the heck is Sauron then?
A. Dissipated and powerless. Much as Elrond moans about them not quite finishing the job, the victory of the West over Sauron at the end of the Second Age (as shown at the start of the FOTR film) was pretty much total. Not only was Sauron destroyed (almost), but pretty much the concept of darkness and evil took a slaughtering too.
In fact, the effect was so severe that for fully 1000 years after that battle, nothing that could actually be traced back to the 'powers of Darkness' actually happend at all. Oh, there were a few internal problems, and the Dunadain are periodically at war with the Easterlings, but nothing of sinister note.
Only after this time- a vast amount of time by any reckoning- did evil start to grow again. The Greenwood starts the long process of becoming the evil and twisted Mirkwood, and a few centuries later, the Witch-King turns up and begins his work, as talked about in-game. But even a thousand years after this return of 'evil', Sauron is still totally powerless. It will be five centuries yet before the Ring is found, and he starts to gain a little power, but it is still five centuries after THAT before the films begin, and even then, as we know, he never recovers full form.
Nonetheless, the return of evil coincided with the effective return of Sauron's 'will'. No-one knows it- not even the Wizards or the Elves- but the formless spirit of Sauron is slowly building up a grand plan, and his agents are at work. Ultimately, the darkness you face CAN now be tracked back to him. But for practical purposes, forget about Sauron.
Q. Well, DUH, that his agents are at work! The Witch-King is the Chief of the Nazgul! Isn't it rather obvious that Sauron is back when his Nine Best Buddies are at work?
A. Not at all. First of all, those who actually remember the Nazgul, who are few, know them as the Nine great Kings who were seduced by Sauron, became Wraiths and fought at their Master's side. They were all totalled at pretty much the same time Sauron was- without their Master they no power. It's not actually crossed anyone's mind that they might ever be seen again. Even if they were, not even Gandalf has seen one before. Only the greatest of the Elves could really make an identity like that simply be seeing him.
And the fact is, no-one HAS seen the Witch-King. He is myth and legend; Many believe he doesn't really exist, being more of a figurehead (the Arthedain royalty are fairly sure that Angmar's leadership has been consistent, however). Anyone who did see him has died, and even if they lived- a big guy in evil-looking armour twatting good guys left right and centre... he doesn't actually have "By the way, I'm a Nazgul" written on him.
It's going to be a terrible shock when Gandalf et al discover he IS a Nazgul, and it hasn't happened yet. All that is known that he is the Witch-King, and his activities in this time make him so notorious that even a thousand years after, he is still known as the Witch-King of Angmar, the only Nazgul with a true personality.
Ironically enough, the rumours he is a Black Numenorean who has learned sorcery are probably not far off- they just mistake what age he was born in. As for his eight buddies- there has never been any sign of them.
Q. So what is this plan of Sauron's then? What's the *****-Thing* up to?
A. I'll answer this purely because I can't see ho anyone would find out in-game, so it may as well be addressed here. As far as everyone is concerned, the Witch-King is a conquering tyrant- which is no bad thing for the bad guys in any case.
But actually, yes, the Witch-King does have a very simple mission- to destroy the Dunadain. The Elves are a fading people, and Sauron knows that only the power of the Dunadain will ever be able to stand against him, should he return. So he has tasked his greatest servant to wipe out that damn line of Kings descended from that bastard who took the Ring from him. Sauron knows how these things work; without the Line, there will be no threat- it's more mythical than logical, and it is how Middle-Earth works.
*Anyone remember my friend who tried to seduce Krisha and turned to the Dark Side in Star Wars, and who famously tired to escape an Agent in the Matrix by running onto the airport roof and had to be resuced by motorised ladder? That's his nickname for the Witch-King.
Q. Hang on... but there aren't any Kings by the time of the films, are there?
A. Eeek...
Q. So what happens to Arnor's throne? It's never mentioned in the films. And if there are no Kings, where does Aragorn come from?
A. Good questions. And at the heart of what this game is about. But in fact, the Arnorian throne IS obliquely referenced in the films. Well, in the TTT Extended Edition. Check it out.
Q. Ok, ok, enough of Sauron and Witch-Kings. What about the Orcs? If evil is so perished, where the heck are they coming from?
A. 'Evil' really accounts for Dark Lords, Nazguls, and stuff like the Wights who certainly should NOT be in the Barrow Downs. It also accounts for just a vague sense of 'stuff going wrong' in the world- kind of like the Force going out out of Balance in Star Wars.
Orcs, despite their evil origins, are thoroughly biological in nature and never went away. The mistake of thinking they had was made rather early, and an over-confident Isildur was killed by an Orc ambush, a number of years after he had thought them totally defeated.
However, Orcs are useless in any organisational sense- they can't lead themselves. They scattered and became disparate.
But when 'evil' returned, huge amounts of Orcs started to breed in the Misty Mountains. They form a realm known as 'Gundabad'. Its formation parallels that of Angmar, which it is right next to, and it can reasonably be assumed that the Witch-King set it all up. He is also their supreme commander. Gundabad itself, however, lasts all the way to the time of the films (and possibly beyond) and is the source of the Orcs Bilbo keeps running into in The Hobbit (the weaker breeds in the Mountains being known as Goblins).
Q. And the Dunlendings?
They are only very briefly seen in the films- being incited by Saruman- but they play a big part in the backstory. Their Homeland actually borders the south of Cardolan, and the barbarian problem they cause is a constant one all the way through the Third Age. They were a very specific problem indeed in the days of Arnor, having adopted Rhudaur as their second Kingdom. The Dunlendings are abnormal in that they are evil men, but a part of the main area of Middle Earth (unlike the Easterlings and Southrons seen in the films, who basically come from 'outisde' the important areas). They're just a good source of non-Orc bad guys, really.
Q. What the heck are the Wainriders?
A. In Tolkien's history, every so often one of the Easterling nations (who are always warring with each other for dominance) launch a huge invasion of the nations of Middle-Earth. Just before the timeframe of this game, the most recent such attack was from a faction of Easterlings called the 'Wainriders'- 'Wains' being chariots- and these Easterlings were modelled on a Hittite/Egyptian style mythology.
This invasion wiped out huge parts of Gondor and also the Eothraic tribes. But not long before the start of the campaign, Gondor finally halted them to the south and drove them out (the victorious General now the Gondorian King), and the tribes rebelled up north with such ferocity that they actually wiped out the invaders, for an encore going on to form the Eotheod.
As far as I know, you won't meet the Wainriders, they are simply a background detail for the Eotheod and Gondorians.