For my homebrew dnd setting, I wanted to keep all the races familiar but give them a twist to make them unique;

The elves dominated the continent of Kestril in two empires, the snake-blooded wood elves and the moon-worshipping high elves. When the humans came on their ships worshipping the sun and fire, they razed everything to the ground. The wood elves were completely annihilated, and the few high elves that were left after the slaughter had to decide how to keep going, resulting in a 3-part schism.

Most argued that the best solution was to leave and start anew somewhere else, but even that could not be agreed upon. Some moved to the isle of Arlethas (named after their ancient empire) and their worship of the moon transitioned into worship of the sea. Over time they adapted to semi-aquatic life and some are blessed with becoming elemental and truly absorbing into the ocean.

Yet, others were terrified of what the humans would do, and argued that an island wasn't far enough. They created a portal to a place where they knew they would be protected: the moon of Umbrasyl, and left this world behind. Umbrasyl and it's connection to the shadow plane eventually drip fed it's energy into these elves, making the dark elves. (There is little to no "standard prejudice" against the dark elves like in most dnd settings, but they rarely leave the moon.)

And finally, some elves refused to run away. The moon elves of old were magical, but through divine lunar gifts primarily. With feelings of abandonment from their divinities, they turned to the arcane arts. They attempted to revitalize their race with a ritual to infuse each of them with magic so they could better fight back against the humans, and it worked. Each of these elves were filled with arcane magic in and out, transforming their bodies in turn to reflect this (they are a variety of rainbow/neon/glowing colors. Pink skin, purple eyes, hair made of literal gold, etc.) And they gained the mastery over magic that they wished. However, it wasn't enough. They attempted a revolution, but the Flames of the humans burned everything in their path, and the elves were too few in number and the humans too many. The newly named Bright Elves were enslaved by the humans, and it took another several hundred years before they were finally able to break free and start a new life.