It begins shortly after the destruction of the World Tree. Archimonde was gone, but a great number of demons remained. Like the Scourge, the Legion doesn't simply stop when you tear the head from the beast. Priestess and Sentinel Velinde Starsong was the Night Elf in charge of leading the forces of the Kaldorei in these regions, assaulting the Legion and pushing them back as far as they could. This held up well for quite some time, pushing the demonic hordes as far back as the borders of Felwood. Unfortunately, the Night Elves were only level 20-something at that point, and the mobs in Felwood are like level 50, so things stopped going so well.
In all seriousness, the Kaldoreian advance was slowing more and more as they pressed into Felwood, their numbers being utterly decimated. Velinde grew desperate as so many of the Night Elves fell to the Legion, and called out to her final hope: The goddess Elune. She begged the goddess for strength and power, the ability to avenge her fallen comrades.
Vengeance came in the form of a weapon which Velinde found just then, a weapon she assumed could only be a gift from the Goddess. The Scythe of Elune. While a formidable weapon on its own, the Scythe had other abilities. Upon raising this weapon, Velinde received a vision. A vision of chaos: barbaric, brutal wolf-men locked in combat with the Lords of the Emerald Flame. In froufrou elf-speak, that means 'demons.' Emerald Flame is, I assume, a poetic description of fel fire. Also, a description of what warlocks can't have.
With a deep focus, Velinde found that she could communicate with these wolf-men, the worgen. Not just communicate with them, summon them. Elune had supplied her with an army! Brutal, powerful, and even better, they were intelligent enough to follow her commands. She summoned more and more of these feral warriors, bolstering her ranks and crushing the demonic infestation of Felwood. Eventually, though, this was becoming worrisome. They were very powerful, and through Velinde, their numbers were expanding rapidly. Even worse, many of the packs of worgen were beginning to show independence; disregard for Velinde and her goals.
Velinde decided then that she would summon no further worgen, realizing that she might be trading one threat for another, even if this was a gift from Elune. Unfortunately, the number of worgen continued to increase, even without her. Either the worgen were stuffed to the gills with powerful, ancient fertility drugs, or they were able to use the Scythe's abilities without her.
Worried, Velinde rounded up all of the worgen packs still loyal to her, and ordered them to remain within the Shrine of Mel'Thandris(now known as the Howling Vale) while she tried to decipher what was happening. After much research, she came across the name Arugal of the Kirin Tor. Rumors said he, too, was capable of summoning worgen. Velinde set out on a journey from Ashenvale to Ratchet, across the ocean to Booty Bay with the intent of traveling north to Silverpine Forest. She made it as far as Duskwood, and retreated to a cave for... some reason. And... apparently lost the scythe. Yeah. I don't know. Oops? And then she died. I... guess.
"In my hands I hold an artifact of unimaginable power. With this weapon, I can summon hordes of the most brutal, feral warriors our kind has ever known. I alone can summon an army strong enough to stand against the Legion, though it may prove to be an even greater threat to our survival.
...oh crap, where did it go!? blargh, i am dead"
The scythe remained in that mine for... well, not very long. A group of miners from Darkshire, including our friend Jitters, stumbled across the Scythe. After unearthing and lifting it from the ground, disaster struck. You guessed it! More worgen.
As described by Jitters in his journal:
"After the Scythe was freed, a change rippled through the mine. Light from our flickering torches warped, and the strength of our voices seemed beyond our control. Sometimes a man's whisper roared through the tunnels forcing hands on ears, and sometimes our shouts barely traveled a few steps before diminishing into a hint on the wind."
Very few survived the coming of the worgen, and to make things worse, a group of people(or things) known only as the Dark Riders followed their arrival. The Dark Riders, however, came from the east. Specifically, Deadwind Pass, the region in which Karazhan lies. They specifically sought out the Scythe of Elune, slaughtering any who got in their way. Sven Yorgen's family were some of the Riders' victims, killed for having no knowledge of the Scythe whatsoever. The Riders do not seem to have been able to find the Scythe. There is no mention of where the Scythe is now. We can assume the Riders didn't find it, because Azeroth isn't swimming in wolf-men. There's many theories as to what or who the Riders are, but that's a discussion for another time.
The story doesn't end there, however. Prior to any of this happening, a wizard of the Kirin Tor named Ur specialized in research of other worlds. He wrote a book, aptly named The Book of Ur, detailing many of the worlds that he saw and the creatures they contained. The worgen were one of those creatures.
"Worgen are real. They may not be from our world, but avenues exist between their home and ours and powerful magic can pull them here. Such chants are best left unuttered. For where ever the Worgen tread, they bring terror and bloodshed with them."
Ur had an unfortunate end at the hands of the Scourge, and much of his research fell into the wrong hands. The Book of Ur, specifically, ended up with Archmage Arugal. Arugal has used Ur's research to summon many worgen of his own, as well as carry out other, similar experiments. One of Ur's other books, 'Ur's Treatise on Shadow Magic' has fallen into the hands of a mage name Morganth, who has assumed control over a tribe of Gnolls in Redridge. Fortunately, brave adventurers repeatedly kill Morganth before he has an opportunity to pursue summoning any worgen or sets out to find the Scythe of Elune.
To sum up: Night Elves did something stupid again. World-ending artifact is probably laying in a ditch somewhere. If Elune gave this thing to Velinde she's absolutely crazy, but we already knew this from her fling with Malorne. The end.