The ninja world was not always as we know it today. In the beginning, the many clans were engaged in an open struggle for dominance where each one was for themselves only. As far as the rest of the world was concerned, all the shinobi were no more than barbarians, soldiers with no allegiance. Things changed when the ninja village system was created with the founding of Konohagakure by the First Hokage, but contrary to the people's hopes, it did not bring an end to the fighting. Instead, the conflict between major ninja clans turned into an all-out war between the newly established ninja villages and, consequentially, the great countries in which the villages were created. That war was known as the First Great Shinobi War. It lasted for many years, until the countries had all exhausted their military power.
The peace that came was not real, but merely a lack of war. Neither common nor ninja military could afford to sustain the fighting any longer, so they all agreed to give up on it. Seeing the unstable balance of forces and realizing that a new war could break out as soon as the nations recovered enough, the First Hokage made a rather desperate move in an attempt to prolong the peace: he proposed that the Bijuu (Tailed Beasts), nine creatures of mythical nature and incredible power, would be captured by the ninja and split between the five villages so that each had an approximately equal amount of power. By doing that, he hoped to make any hypothetical conflict between the villages too destructive and risky to be benefited from, thus prolonging the peace.
For many years, his plan had served its purpose, but it was doomed to fail eventually. Although none of the five villages managed to get any decent control over their Bijuu, all of them eventually found out that their rivals had only succeeded at keeping the creatures from rampaging, as well. As soon as that information was revealed, the only thing that deterred everyone from starting up another war - fear - vanished.
The Second Great Shinobi War followed briefly, but this time the balance of powers was different. Mizugakure stayed completely uninvolved, which was possible thanks to its remote location, while Sunagakure, being located in a desert, could not deploy quite as many troops as the other villages, but it was also in relative safety thanks to that. The main conflict involved Konohagakure, Iwagakure and Kumogakure. The Leaf village and the whole of Fire country, located in the middle of the rest, suffered the most damage and was getting close to being conquered. In their desperation, the ninja from Konoha briefly unsealed their Tailed Beast, the most powerful of all - the Nine Tailed Fox - an event which laid waste to both their own and their enemies' armies and signified the end of the war. In the end, Stone village was the one that gained the most from the war and Leaf was the one that lost the most.
While the horrors of the Demon Fox's release are still fresh in the people's memory, it is not a reliable guarantee for peace. Konoha broke the unspoken taboo on using the great beasts. All of the great villages are still looking into controlling the Bijuu in various ways, or at least directing their destructive power in a way only harmful to the enemy, but the fear of their release has actually faded somewhat after it had happened once. Some people also believe that the Leaf no longer holds custody over the Kyuubi, meaning it will not be able to defend itself against future invasions in a similar fashion. Only twenty years had passed since the end of the Second Great Shinobi War, and already the world seems to be heading towards another one.
On the twenty-first anniversary of the end of the Second Great Shinobi War, the Kages of the five shinobi villages decided to hold a meeting. The reason was the ever increasing tensions between the villages, and the goal was to find a way for all the villages to coexist peacefully. However, it was not meant to pass. The event was not a secret within the villages, but the exact place and location were. The only people who knew that were the Kages themselves, their personal bodyguards and their most trusted advisers. But when a search party investigated the place a week after the designated date, all the participants were found dead.
The investigators could never determine how events unfolded at the meeting, but their best guess was this: the peace talks failed and the event turned into a death match with five sides fighting for dominance. No witnesses remained and no real clues were left behind, however that seemed as the most likely outcome: there couldn't be any force in the world which could win against five Kages and at least twice as many jounin without suffering any loses and, since the meeting was held on neutral ground, none of the Kages themselves could be definitely said to be the cause.
With the death of the Kages, the distrust and animosity between all the villages grew even further. Lacking leadership, the villages themselves had fallen into disorder as various shinobi groups with conflicting opinions began their struggle for power. The world of ninja is entering one of its darkest times.