The first age of was the Age of Ancients. In that time everything was unformed, shrouded by fog with archtrees and dragons. By the name we can suppose that people were living, as the name says “Ancients”, this can include the lost land of Oolacile or Gods.
The fire appeared, with this came disparity “Heat and cold, life and death, and of course… Light and Dark.” By this we can see that in this moment Life appeared as the same as death, so we can also agree that previews to this age the rules were deities and with fire the living start to appeared.
“Then, from the Dark, They came”
We can understand this as the livings who appeared from the darkness, but also they can be the dead. I stay in the side of the dead because of the following.
“And found the Souls of Lords within the flame.”
I believe are undeads, because undeads are attracted to souls, also because I think in here they are saying that those “not living” are like empty shells.
When it says “found the souls of lords”, there is an obvious point of deities in the souls and that these creatures found the souls of the gods in a way (of course this will tell us that the gods were dead).
“Nito, the first of the dead”
Nito is weird, because he is the first of the dead, and I guess he found a Lord soul(?). So how he can be dead and have this Lord Soul? I don’t know, but he point to be a Lord of Graves more than a God of Death, because he doesn’t look like the takes lifes, but he look like he watch over the dead of others.
“The Witch of Izalith, and her daughters of chaos”
Ok, Witches are obviously a group of sisters (brothers to?) that use Pyromancy (but apparently they use Sorcery first). The Witches are important later.
“Gwyn, the Lord of Sunlight, and his faithful knights”
Well Gwyn obviously is a deity, but is not the highest, because Allfather Lloyd is his uncle. Now in here I don’t know how everything works, because there are more deities, but these gods doesn’t seem to be tied to the “found the souls of lords”, which makes me believe there were few lord souls and other gods were alive (specially because Lloyd is named allfather). His faithful knights are the silver knights, Artorias, Ornstein, Hawkeye Gough and Lord's Blade Ciaran.
“And the furtive pygmy, so easily forgotten”
The Pygmy is one of the most mysterious character on the game because you never have any kind of contact with him (directly or indirectly). I believe that the Pygmy is the one who pull the straight in here. Pygmy is supposed to be a small character a midget in a way, but in the story it doesn’t look like one, this might be because the name he have is figurative, and this named Pygmy because of his obvious lack of protagonism in the story. But I think there are the following possibilities for the Pygmy.
A) The Pygmy was your ancestor.
B) The Pygmy was the one that put the “ember” on the dead knight, giving him a short curse of the undead to save you from the Asylum.
C) You are the Pygmy (it makes sense, you are the smallest character on the game, and everyone is taller than you).
“And Seath the Scaleless betrayed his own, and the dragons were no more
Thus began the Age of Fire”
Ok, Seath betrayed the dragon, those die, but why? I think it was because Seath wanted the Immortality, and the only way to get it was through experimentations on a crystal. To get access to the crystal he work with Gwyn to kill the dragons. This can be contrasted by his experiments and that he was the first Undead (probably it was a mistake, he though as becoming undead he would become immortal, but he didn’t knew about the Hollow part of the deal).
And the Age of Fire is the Age of Gwyn and his allies (his deities). I think the Age of Fire is like a Age of God’s on earth.
“But soon, the flames will fade, and only Dark will remain”
So I think in here its saying that the Gods are not immortal, and so they are going to die eventually. I believe Gwyn wasn’t to keep his kingdom under his rule, and for this he search immortality, the same as Seath. Obviously neither of them know about the Hollow part apparently.
Gwyn went to the Kiln to extend the flame burning everything and dyeing. His best knights die in there and they got black (Black Knights), and apparently the bonfire stain with black at the ones who stay in there (but also apparently keep them safes to not going Hollow?). Gwyndoline keep his grave, Nito, The Four Kings and Seath keep parts of his Soul and the Lordvessel is in Anor Londo.
“Even now, there are only embers, and man sees not light, but only endless nights”
I think in here is the first time the story talk about Man, like people, humans. So I still believe the age of Fire is the age of Gods, and the end of them is the Age of Men (darkness), but there is no light in this age because Gwyn is not letting it to happen.
“And amongst the living are seen, carriers of the accursed Darksign.”
This is weird, because the Darksign says that is a curse for the undeads, and its saying here things about the livings.
What I believe its going on is that, your character is in some way related to the Pygmy, its saved from the Asylum, it does this quest and go to kill Hollowed Gwyn to bring end to the Age of Fire.
Lordran seems like the land of the undeads (as the npc in the firelink shrine tells you that this is an accursed land), and so the undeads have to come here (or are forced), this would explain why there are undeads from so many places.
The Way of White apparently use to hunt Undeads, as you can see most of them hates the undeads, but they were worshiping Allfather Lloyd who is uncle of Gwyn. I believe Lloyd was against the goal of Gwyn in a beginning, this is why the Way of White hunted Undeads.
And to prove that the Undeads were bad, was what happened with the kingdom of Balder, that become ruins because of the undeads.
This is still doesn’t let you very clear why the maiden when with Nito? If the Way of White is about Lloyd, why would they go with Nito? Probably to ask him to stop Gwyn? To kill him and so kill Gwyn? I don’t know.
Also I think a lot of Gods were against Gwyn Decision, like Gwynever (gwyn ever) who went out of Anor londo, with other Gods. The only one there is Gwyndoline.
Another mysterious character is Gwyn first son, who is connected to Warrior of the Sunlight covenant (which are very important in the game) and because as the pygmy, it never appears.
I believe this act of Gwyn also call the followers of his first son, who come from Astoria to Lordran when they become undead, with the goal to stop Gwyn (probably they become allies of Way of White).