"Order birthed Time, and Chaos birthed Action. Not a very nice parallel, I admit. Other divinities came to be, then, with Time allowing them to get... you know. Organised.
"Anyway. The spirit of Action, Shor, convinced many divinities to create Mundus, our realm, and they invested their power and existence into it. Some of them died to be the bones of the world; some fled, the sun and the stars are the holes in the Firmament they tore on their way out. Some remained inside Mundus, the Eight Divines, including Time, who is named Auri-El, or Akatosh. The Arcanaeum has an orrery with all of them, as well as our planet. Order and Chaos stepped out of Time, and Shor was sundered and became our moons.
"The spirits who helped make the world are the Aedra. The ones that didn't are the Daedra. Their realm is Oblivion, and it surrounds Mundus, in the blackness of the sky. And most of the Daedra don't care about Mundus, but the ones who do often want to control it, or destroy it, or manipulate it.
"But that's just the powerful ones. The smaller ones, elemental spirits barely capable of thinking, those don't care. And we offer them a payment in Magicka to bind them to us, to Mundus, for a short time, to help us. That's a part of Conjuration magic."