Once known as the Lands of Danger and Despair, the Serpent Isle was once part of Sosaria until the end of Ultima I, when the destruction of Mondain's Gem of Immortality caused most of the original lands of Sosaria to become separate worlds. This is the setting of Ultima VII, Part II: The Serpent Isle.
* * * Some spoilers ahead for those who have not played Ultima VII Part II! * * *
Shortly after its sundering from the lands that eventually became Britannia, an advanced civilization known as the Ophidians or Serpent people, because they worshipped the Serpents in the Ethereal Void, the Serpent of Order, the Serpent of Chaos, and the Great Earth Serpent, or Serpent of Balance. The people were ruled by a triumvirate of Hierophants who communed with the Serpents, making their civilization something of a fragile theocracy. Just how fragile this was is illustrated by what happened when Exodus chained the Great Earth Serpent to his will in Ultima III. The Great Hierophant of Balance was no longer able to commune with the Serpent and the two principles of Order and Chaos began to go to war. The forces of Order were eventually victorious, and the Serpent of Chaos was split into three spirits trapped in soul gems that were placed in the Temples of Order, that were known as the Banes of Chaos. Because the Serpent of Order could really do nothing separate from Balance, it eventually grew mad and the fabric of Ophidian society began to disintegrate rapidly. A series of natural disasters eventually destroyed the last remnants of that civilization, and only enigmatic ruins carved with the signs of the Serpent remained.
Just before Ultima IV began, a group of Sosarians, led by the Mad Mage Erstam who opposed Lord British's call to adhere to the Eight Virtues found the gateway to the Serpent Isle and settled there. The Wizards of the ancient city of Moon who opposed Lord British's call to Truth founded the city of Moonshade. The people of the old city of Fawn who were devoted to Beauty and saw no worth in the principle of unconditional Love founded a new city of the same name on the Isle. The stout warriors of the old city of Montor who did not accept Lord British's call to temper Courage with the other virtues went and founded the city of Monitor there, and founded an order of knighthood that fought against roving tribes of goblins that were common in that land.
That was the state of affairs when Batlin escaped from Britannia under the Guardian's orders and was told to seek out the Banes and use their power to summon the Guardian into the world.