Centuries ago, a group of heroes ventured into the Underdark, seeking to return the Sun from the clutches of Lolth. Lolth’s capture of Pelor was just the cap on a long string of events of her manipulation, killing many of the gods, and causing many more of them to flee to the Astral Plane, sealing it off with a rebuilt Golden Lattice.
The heroes failed in their efforts, with only Sala and Varjo surviving. Sala struck a deal with Lolth. In exchange for most of the Rod of Seven Parts, a portion of the Sun was returned. Lolth was able to use the Rod to usurp Demogorgon, becoming the new Prince(ss) of Demons.
Sala gained demi-divinity as a result, and founded the Salassian Empire. The Empress rules over a broad empire, with the capital being a pit of undeath and vampirism. Her enforcer, Varjo, is known to travel with a vampiric retinue, crushing any rebellion.
The world itself is a frigid wasteland (the sun is pretty dim), but many/most peoples have managed to to eke out an existence. Scattered kingdoms all pay fealty to the empress, but are largely isolated by distance. The roads are impassable during all but summer, and most folks spend their scraping out what food they can grow.
The campaign starts in the area of the Hinterfast, a mysterious fort on the outskirts of the kingdom of New Arkhosia. New Arkhosia is a border vassal kingdom of the Salassian Empire.
The initial campaign of “Hinterfort” is my love letter to Keep on the Borderlands. If anything, B2 is the the single thing that old time gamers all have a connection to. Folks (including myself) use the term “Keep on the Borderlands” as a mild derogatory. It denotes an adventure with somewhat random monsters, arranged in a simple manner for the adventurers to knock down.
I can imagine Gary wrote this in the context of including it in the Red Box for beginning players, with no idea the cultural impact it would have.