The Burning Legion and the Scourge spread the disease around and turned a good portion of the population into the undead. This kept going on until Illidan, angsty as usual and trying to obey the commands of his master, tried to melt Northrend and destroy the Lich King. He failed, like any do gooders would before the stories end, but he did weaken the Lich King considerably. Enough that many of the undead were given their free will back and were no longer direct servants of the Lich King.
Sylvanas, being the cunning Pokemon trainer general she was, rounded up all of the newly freed undead and assaulted the Dreadlords who were trying to reestablish control along with the remaining Human forces trying to hold Mabinogi Gold onto their lands. Thus, purging Lordaeron of any enemies and securing it as the new home for the Forsaken. They built the Undercity in the ruins of Lordaeron and have since established it as their base of operations.