The various Human kingdoms have held ties to the Dwarves and the High Elves for many years. The Humans created their ties to the Elves by joining with them to fight against the Forest Trolls. In exchange, the Elves taught the Humans how to wield magic, and it has been a part of their culture, and symbolic of the Alliance as a whole, since.
However, it was when Ner'zhul's original Horde came through the Dark Portal and crushed the Kingdom of Azeroth that these powers united to form a resistance. Although this coalition was much stronger than Azeroth fighting alone, the Orcs were no longer alone either, and very nearly overran the Alliance in the second war as well. If it were not for the treachery of Gul'dan, by taking a large contingent of the army with him on a personal mission, the siege of Lordaeron would have been complete. Given this opening, the Alliance powers rallied and drove the Horde back off their shores and caused the standing armies to retreat through the Dark Portal.
During the third war, Medivh's spirit came to Arthas to convince him to take his people and flee to Kalimdor. Arthas ignored him, and was corrupted by The Lich King to slay his own father, leaving the Kingdom of Lordaeon in upheaval. After that, Medivh visited the mage Lady Jaina Proudmoore instead, and she made her way to the southern parts of Kalimdor, establishing an outpost on the island of Theramore in Dustwallow Marsh. In the Battle of Mount Hyjal, the Alliance powers that were present, along with the Horde and the Night Elves, stood in resistance of the Scourge to prevent Archimonde from being summoned. Ultimately, the Night Elves sacrificed their immortality to end the battle by destroying the world tree, Nordrassil. However, were it not for the assistance of the Humans and Orcs, the Night Elves would not have been successful. They later joined the Alliance with the realization that they could no longer turn a blind eye toward the rest of the world.
Although the most major battle was fought, there were continued battles between the various powers. The High Elves, now known as the Blood Elves, withdrew from the Alliance after being nearly sacrificed repeatedly by the Alliance commander. So when World of Warcraft finally began, it was the Humans, Dwarves, and Gnomes, and additionally the Night Elves who comprised the forces of the Alliance.
One year later, the Draenei ship, The Exodar, crashed into Azuremyst Isle and they made contact with the nearby Night Elves, and later the rest of the Alliance. Being followers of The Light and sworn enemies of the Burning Legion, the Draenei took to the Humans well, and became the fifth partner in the Alliance. They provided Shamans, which previously were exclusive to the Horde.
Although the Kingdom of Lordaeron is now Horde-controlled territory, Azeroth is still ruled from a rebuilt Stormwind City and the neighboring areas of Elwynn Forest, Westfall, Redridge Mountains, and Duskwood. Technically only Elwynn and Westfall are considered Alliance territory for the purposes of PvP servers. The human lands are primarily agrarian, though by no means well-settled. Gnolls, Kobolds, and bandits of the Defias Brotherhood run rampant throughout the land.
The Dwarves and refugee Gnomes call Ironforge their home. Nestled in the snowy banks of Dun Morogh, the rugged landscape is befitting of the dwarves, who have a few frost trolls to contend with, but primarily only need to battle the local wildlife...and the leper gnomes in Gnomeregan. Connected by tunnels, the same is largely true in nearby Loch Modan, except that Troggs have overrun a good portion of the excavation sites the dwarves are so fond of. Through another pass is the Wetlands, a miserable swamp that is home to Murlocs and threatening groups of Dark Iron Dwarves and Blackhand Orcs.
The Night Elves have created a new world tree that they have named Teldrassil, and built their capital there, Darnassus. Without the blessing of the dragonflight, the world tree has become corruptible, but so far only minor difficulties have surfaced, mostly in the form of fel-corrupted Furbolgs. On the mainland, furbolgs and wildlife also run the length of Darkshore, and trouble is brewing in the contested Ashenvale Forest, where the Horde are attempting to take control of the land to harvest for lumber!
Since crash-landing The Exodar into Azuremyst Isle, the Draenei have inhabited those landmasses, as well as nearby Bloodmyst Isle. Wildlife and furbolgs are the primary source of disarray, but Nagas and Moonkin do their share, and Bloodmyst Isle faces additional woes from Blood Elves and the Burning Legion. A majority of the problems in these lands were created by the Draenei's sudden arrival, and they are determined to resolve these problems.