Back in Ultima I: The First Age of Darkness, one section of the game world was known as "The Lands of Danger and Despair". Shamino, a recurring character in the Ultima series, was a ruling lord here. The Lands of Danger and Despair vanished after the conclusion of Ultima I and became Serpent Isle, separated from Sosaria, as the world of Britannia was called before Ultima IV.
The original inhabitants of Serpent Isle, the Ophidians, had a culture where serpents played a central role. They eventually became polarized as the forces of Order and Chaos, respectively, and fought a great war that destroyed their culture and left their cities and temples in ruins. Order "won" the war, destroying the Chaos Serpent, but thereby upsetting the natural balance to the point where the entire universe is unraveling. (It turns out that the "Great Earth Serpent" that guarded Exodus's fortress in Ultima III was actually the Balance Serpent that Exodus had ripped from the void, triggering the war between Chaos and Order in the first place.)
Much later, Serpent Isle was re-settled by humans who had left Sosaria voluntarily, or who had been exiled. An alternate name for Serpent Isle is "New Sosaria", a reference to the original homeland of these settlers. Many of them referred to Lord British as "Beast British", and had a very low opinion of him. After he united the lands, and with the establishment of the eight virtues, those unhappy with his rule fled to Serpent Isle. Unlike Britannia, which has eight cities representing the eight virtues of the Avatar, Serpent Isle has three city-states, each with their own beliefs, which are warped versions of the Britannian principles of Truth, Love and Courage:
In the city of Moonshade, mages rule, and "mundanes" are regarded as an inferior servant-class. Instead of truth, they strive for power.
Those from the city of Fawn champion beauty above all else, instead of Love.
The Monitor warrior-culture is ostensibly based on knightly courage, but in truth is rife with feuds, intrigue and betrayal.
Serpent Isle has essentially the same map layout as the former Lands of Danger and Despair, though this might not be immediately obvious to players. The formerly separate towns of East and West Montor have merged into Monitor; the large Sleeping Bull Inn has taken the place of the village of Bulldozer; the village of Gorlab vanished in the newly formed Gorlab Swamp (an important plot element); and the ruined Ophidian cities of Skullcrusher and Spinebreaker, apparently named after the mountain-chains in which they lie, are located where dungeons of the same name were found in the earlier game.
Game storyline
Eighteen months after the destruction of the eponymous Black Gate at the conclusion of Ultima VII: The Black Gate (and six months after the Guardian attempted to trap the Avatar and the whole of Castle Britannia in a blackrock sphere on the anniversary of that event in Ultima Underworld II: Labyrinth of Worlds) it is discovered that the Guardian ordered his right-hand man Batlin to follow Iolo's wife Gwenno, who went to explore Serpent Isle. Lord British sends the Avatar and three of his companions—Sir Dupre the knight, Shamino the ranger and Iolo the bard—to Serpent Isle in pursuit of Batlin. The journey entails travelling into an arctic zone where two serpent pillars emerge from the sea; upon moving between the pillars, the ship is teleported away to Serpent Isle.
At the beginning of the game, the expedition's ship is beached at Serpent Isle by magical storms. Soon afterwards they lose most of their equipment to another magical storm that exchanges equipment for seemingly random items, such as a magical helmet exchanged for a fur cap. It turns out that the items switched locations and that the items gained thus are leads to the location of the missing pieces of equipment, such as a penguin egg indicating that the item it has swapped places with will be found among the penguins in the frozen north.
Two overarching plotlines exist within the game: the expedition must reclaim their equipment, as many of the items are required to solve puzzles and subquests in the game; and they must explore Serpent Isle and discover its history to understand the reasons for the magical storms that will destroy the land. Over the course of his adventures, the Avatar and his companions visit the ruins of the lost Ophidian cities, witness the extinction of the peaceful Gwani, and learn that Iolo's wife Gwenno was killed (though later manage to have her revived). Lord Shamino's ruined castle is also visited, and his and his dead fiancée's tragic backstory is revealed.
The storyline can roughly be divided into three parts.
Chasing Batlin
Exploring Serpent Isle while tracking Batlin (and Gwenno), the expedition learns that the magical storms, which are gradually getting worse, indicate that the world is unraveling. The apocalypse is drawing near, and when it turns out that a lighthouse on Serpent Isle was exchanged for Britannia's Royal Mint by teleport storms it becomes apparent that the problem is not limited to Serpent Isle, but is affecting Britannia as well and possibly the entirety of creation. (At one point in the game, the Avatar visits the magical dream world where he meets Lord British who confirms that similar magical storms began ravaging Britannia shortly after the Avatar left.)
The Avatar learns that Batlin is trying to capture three Ophidian demi-gods known as the Banes, but Batlin always remains several steps ahead and the Avatar does not arrive in time to stop him. Batlin was hoping to tie the Banes to his own service to attain god-like powers, betraying the Guardian, but they escape, slay Batlin and possess the Avatar's companions who in turn proceed to devastate the three cities and kill most of the inhabitants.
