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Some call our realm a world of shadows, but that makes it sound so unpleasant...The twilight there holds a serene beauty...You have seen it yourself as the sun sets on this world. Bathed in that light, all the people were pure and gentle...But things changed once that foul power pervaded the world... | 
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| — Midna | ||
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The Twilight Realm is the name of a parallel dimension to the realm of Hyrule, a world of shadows and perpetual twilight whose only source of light comes from the two sacred orbs known as the Sols that are kept in a special shrine near the plaza of the Palace of Twilight. It is the homeworld of the Twili, a race of shadow-beings descended from the Dark Interlopers that were banished from Hyrule to this strange new world as punishment for their attempted conquest of the Sacred Realm in an attempt to seize the Triforce. In the aftermath of the Interlopers' banishment, they evolved into the Twili race. The Twilight Realm is ruled by a Royal Family of its own, the Royal Family of the Twilight Realm that rules from the Palace of Twilight, the seat of the realm's government. The Head of State for the Twilight Realm is typically the King of Twilight if a male ruler is in charge, or the Twilight Princess in the event that a female ruler comes to power. The lone link between the Twilight Realm and Hyrule is a relic known as the Mirror of Twilight, which acts as the gateway between the two worlds.
For much of its early history, the Twilight Realm was a peaceful place, until the King of Evil known as Ganondorf was banished to the realm by the Ancient Sages, where his evil influence would cause a coup of the government and cast the realm into darkness by overthrowing the true Twilight Princess and installing a puppet ruler named Zant into the position of ruler of the Twilight Realm. Zant would go on to seal away the Sols, leaving the Twilight Realm in darkness, and invade the land of Hyrule on Ganondorf's orders in order to merge the two worlds together into a single empire. After the Dark Lord's defeat however, peace was restored, and the Twilight Realm was truly free of his grip. This was made possible by the efforts of the Hyrulean Hero Link, Hyrule's Princess Zelda, and Princess Midna, the rightful ruler of the Twilight Realm. The Mirror of Twilight was then shattered by the Twilight Princess, severing the only known road between the two worlds and desroying the only known means of travel between them to prevent similar events from happening again.
History
The Twilight Realm's full history is incomplete, leaving only a brief bit of its origins and its recent history as the only available information regarding its past. Template:Spoiler
Origins
It is unknown how the Twilight Realm came to be formed, though it has been mentioned that other worlds and dimensions such as Termina were formed as a side-effect of the creaton of Hyrule. As such, this is thought to be the way in which the Twilight Realm was formed by most. Apparently its original purpose was to serve as a prison world for those who displeased the Golden Goddesses of Hyrule, and later those that were sentenced to banishment by the Royal Family of Hyrule. It was a world like no other, a world of perpetual and constant twilight, outside of which its citizens could exist only as shadows unless otherwise protected by the powers of the goddesses.
At a certain point in the history of the land of Hyrule, a war broke out across the land when a group of shadowy magicians known as the Dark Interlopers learned of the mythical Triforce located within the Sacred Realm and attempted to establish dominion over it to harness the Triforce's power. It is implied that this became a civil war of sorts that turned friends against one another and resulted in some beings siding with the cause of the Interlopers to harness the Triforce's power for their own ends. To this end, the Interlopers crafted an ultimate weapon, the dark relic known as the Fused Shadow, inside which they had vested a vast amount of their magic.
When the Interlopers seemed on the verge of victory in this effort, the Golden Goddesses decided to order the Light Spirits of Hyrule to intervene and seal away the dark magic of the Interlopers to halt the war. The Light Spirits, at the order of the goddesses, shattered the Fused Shadow into four fragments (hiding three of them across Hyrule and leaving the fourth in the hands of the Interlopers) and drove the Interlopers across the land of Hyrule into the twilight. They were then imprisoned within the Twilight Realm and lost their ruler as punishment for their greedy actions that sparked the war.
In addition, the Twilight Realm's effect of causing those that dwelled within it for an extended period of time to only be able to exist as shadows outside of it took its toll on the Interlopers, dooming them to this fate as well. Over time, the Interlopers would evolve into the Twili and reestablish their monarchy that would come to rule over the Twilight Realm. The goddesses did not completely sever the Twilight Realm's connection to Hyrule however, for they left a lone link between the two worlds in the hands of the Ancient Sages, the Mirror of Twilight, which could only be shattered by the true ruler of the Twili.