Fairy Tail Village is a small village divided into 5 areas. Each area is watched over by a God of various attributes; Fire, Ice and Water, Earth, Lightning and Dark. Ice and Water attributes combined because of their closely related attributes.

Gods are actually dragons in their real form. They can take on a human form too. When in their real form, their scales will be radiating off materials according to their various attributes and their powers will be according to their attributes. The Gods can watch over and rule their respective areas through a portal called 'The Eye'. Sometimes the Gods would request for a sacrifice and each time, they would want a particular human as a sacrifice. If the humans give their God that particular human as a sacrifice, the God will bless them with good harvest. If they disobey their God, disaster will be brought upon them. When the villagers die, their souls will go into the Godly World where they will reflect on the mistakes they made when they were alive. If they agree to repent, the God will allow their souls to reincarnate and let the effect of their conscience remain in them while they live another life on Earth. As for those who remain unrepentant, the God will punish them accordingly.

Priests and Priestesses are the sacrifices given to the God. The God required some opinions about how to rule their area and even ask them about whether they should input new laws. The Highest-ranking Priest and Priestess is the male and female who had shown their God that he can trust them thus making them his advisors and put them in charge of the other priests and priestesses. Once the God feels that they are of no use to him anymore or have served him long enough, he would allow their souls to be reborn into a new body. Priests and Priestesses are sent to deliver the message of their God wanting a sacrifice to the people living in the respective areas.

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To ensure and maintain peace between the areas in Fairy Tail village, agreements and tradingwere hence formed. The various areas have something that the other areas do not. Since the other areas are in need of those materials, they take those materials and trade with something from their own area. The God will send the highest-ranking priest and priestess to do trading with the other areas. If any priest or priestess gives fewer materials than needed, war will break out in the Godly World. That will surely cause the village to fall apart as well.

Priests and priestesseswho are lovers in the Godly World are allowed to be recognised as a couple by everyone in the Godly World. The rituals performed are different from the ones performed on Earth. The rituals performed in the Godly World are simple. Without the need to prepare anything, the couple simply has to swear to be with each other forever and always, even if they were to reincarnate. The couple will have to agree with each other that they want to be recognized as a couple.

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Pure-bloods are either the Gods themselves or their offspring. Gods produce offspring so that they would take over the rule of the respective areas. After they've stepped down, the Gods would have their soul reincarnated.

Half-bloods are the offspring of a God and a priest of priestess. The first half-blood to ever exist was the offspring of the Lightning God and one of his priestesses. Such a thing had never occurred before and that half-blood child was scorned. He grew up normally, as any pure-blood child would but he was despised by the Gods. He was deemed as an abomination. As a result, when he turned 25, his immortality was taken away and was cast down to the Earth. Some areas condoned the half-bloods while others did not. Some of the future half-blood children shared the same fate while others were allowed to stay in the Godly World and treated as pure-bloods.

During the entire first half-blood child fiasco, the Lightning God had been very distracted. The Lightning Area was plunged into a period of chaos as there was no leader. This only caused more disapproval towards the child.