About a thousand years prior to the Third War -- back when the humans of Azeroth were still hitting each other with rocks -- a massive threat arose in the south of Kalimdor. Two nasty races of bugs, the Silithid and Qiraji, were forming an army to attack Kalimdor at the behest of the old god C'thun. Since the night elves had settlements in Silithus, they saw what the insectoids were doing and decided to take the fight to them before it was too late. Fandral Staghelm and some of his fellow druids awoke to command the night elf forces.
Fandral had come to the battlefield with his son, Valstann, who he loved dearly. With them were an army of sentinels, druids, priestesses and assorted elves. The elf army met the army of the bugs in the sands of Silithus, and although the night elves fought well, the Silithids and the Qiraji just kept coming from inside their city of Ahn'Qiraj. Fandral and Valstann fought their way to the Qiraji general Rajaxx, but were unable to take him down.
After several days of fighting, the Qiraji had suffered serious losses and withdrew to replenish their forces. The night elves took a breather, knowing that the Qiraji would probably be back the next day. But that night, Staghelm received word that the night elf settlement of Southwind Village was under attack from the enemy. He couldn't take all his troops there and risk having the Qiraji come back and take all of Silithus out from under them. Valstann offered to lead some night elves to the city so that Fandral could still defend the main lines. Fandral was worried that it could be a trap, but let his son go anyway.
The night elves fought through Silithid troops for the next few days, but the Qiraji commanders were nowhere to be seen. Valstann and his troops had also sent no word. On the third day after the battle resumed, a massive swarm of Qiraji appeared before the night elves, but did not attack. Instead, General Rajaxx came to the front lines, holding an injured Valstann in his claw. Fandral and the night elves charged the Qiraji, but the general simply ripped Valstann in half with his claws. Ewwwwwww. Unbeknownst to Staghelm, Valstann's death was part of a specific plot by the Qiraji emperors (better known as the Twin Emps) to demoralize the elf army.
The armies fought again, but Fandral was devastated and the night elves were soon overwhelmed. They fell back to Un'Goro Crater, and the Qiraji let them go for some reason. The official story of the War of the Shifting Sands suggests that some sort of primal force was protecting Un'Goro Crater, but after leveling three characters through that hellhole of a zone, I've got to say that whatever primal force is in there can bite me. Freaking stealth Devilsaurs. Anyway, the night elves and the Qiraji kept fighting for several months, and the elves began to suspect that the Silithids and Qiraji were reproducing faster than they could be killed.
Shiromar, the leader of the night elf priestesses (I guess Tyrande was busy pining over Malfurion), struck a deal with the Bronze Dragonflight to get their assistance in the war. After the Silithids attacked the Caverns of Time, the bronze dragons came to help out, and even called in the other dragonflights for aerial support. But once again, they couldn't make a dent in the Qiraji numbers. Maybe if they didn't have so many players in the zone, the mobs would stop respawning so quickly.
The war was unwinnable in the conventional sense, so Fandral and the bronze dragons came up with a plan. As the dragonflights held the Qiraji at bay, Shiromar created a barrier containing the Qiraji and Silithid within the city of Ahn'Qiraj. The dragons were also stuck there, where they could convieniently create weapons and armor for adventurers. The bronze dragon Anachronos created a gong and handed a scepter to Fandral, telling him that if they wanted to resume fighting the war, they only had to ring the gong with the scepter and the gate would open. But Fandral wasn't too enthusiastic about refighting the war, and he smashed the scepter into several pieces and stormed off, angering the Bronze Dragonflight. "My son's soul will find no comfort in this hollow victory, dragon. I will have him back. Though it takes millenia, I will have my son back!" he said, heading back to the barrow dens for a nice, long nap.
Fandral didn't seem to participate in the Third War, leaving that one up to Malfurion and Tyrande. But after the Third War, when Malfurion became trapped in the Emerald Dream, he took advantage of the situation to suggest that they plant a new World Tree. This would help the night elves regain their treasured immortality. He convinced the Circle of Ancients in Darkshore to plant a new tree, Teldrassil. But the Bronze Dragonflight was still ticked at Staghelm for breaking the scepter, and their leader, Nozdormu, didn't bless the tree. No immortality for you! Nevertheless, the night elves built their new homeland and capital city on the tree, and Fandral was named the Arch Druid of the night elves in Malfurion's absence.
Where he is now: Fandral Staghelm resides in the Cenarion Enclave in Darnassus. His hobbies include collecting Morrowgrain, telling adventurers that they're not important enough to talk to him, and informing everyone who comes by him that he's a better ruler than Tyrande (who is still technically the leader of the night elves.) He and Tyrande constantly spar over the future of the night elves. Staghelm is pretty militaristic for a night elf and thinks they need to expand south, Horde be damned. He wasn't too happy with the tauren joining the Cenarion Circle, either. Adventurers (note: you) killed General Rajaxx, but Staghelm takes little comfort in that because his son is still dead.
What he might be up to: There are a couple of rumors about Staghelm swirling around. First off, some night elf questgivers are concerned about what he's doing with the Morrowgrain, since it can be used in curses and not just to make a delicious breakfast cereal. Secondly, it's been suggested that his desire to have his son back and issues with the Bronze Dragonflight might make him want to interfere in the Caverns of Time. And finally, a Warcraft lore book suggests that "another druid" was partially responsible for trapping Malfurion in the Emerald Dream, and notes that only Staghelm and Keeper Remulos are powerful enough to do that. Staghelm would sort of be the obvious villain there.
Identifying characteristics: Bluish-green hair, shirtless for some reason, wears an odd kind of skirt/codpiece combination. Although he's considered one of the more difficult faction leader fights (he summons treants every twenty seconds), Horde get a bonus here by having less player opposition. Some night elf players choose not to interfere with raids on Staghelm since he deserves to get what's coming to him.
For more information: WoWWiki on Staghelm, official Blizzard article on the War of the Shifting Sands, Los Banditos Locos vs. Staghelm.