So the Dusk Wardens are led by three sisters called The Weavers. Their most important duty is to safeguard the Embers of Innocence. They use the Embers to weave together dreams. So every single child in Faerun creates an Ember of Innocence. Basically it’s created at the exact moment the harsh reality of the world takes away their childhood innocence. It’s the last echoing piece of that innocence before the child moves on to adulthood.
The Dusk Wardens gather each and every Ember for the Weavers and they keep them safe in their sanctuary. They’re not really something physical, more a magical essence if that makes sense.
Anyway, when Eylo was just an actual teddy bear he belonged to a little girl who lived in Mirabar. You can likely guess, her Ember was created when Mirabar was destroyed by Zargathax. Ever since then, the Wardens have been losing the war against the followers of Dendar because of the sheer amount of nightmares created by Zargathax - and also because so many children were affected by his reign of terror, there was a huge amount of Embers of Innocence created, which became lost because the Wardens haven’t been able to track them all down and bring them to the sanctuary. The more innocence that’s lost, the harder it is to create dreams (they’re literally running out of the resource) and counteract the epidemic of nightmares. So Dendar has been growing immensely in power.
So there’s a little more to this, that I’ll get in a document for you so you have it - but basically Eylo was brought to life with that little girl’s Ember. One of the Weavers infused it inside him and that’s what’s given him life. (This is against the rules and that Weaver was removed from her position for doing that. Again, I’ll elaborate more in the doc and explain why she did it and why she was kicked out for doing it)
Eylo can have been around for a while, so this possibly happened before magic started to become very unstable (it can have happened very shortly after the end of Campaign 1. Eylo can have been sentient for 50 or so years by the time we meet him, if that helps at all) - which means the only thing keeping him safe is the fact that his Ember is encased inside the magical “shell” of his body. Obviously this can mean he’s on borrowed time because if magic is failing, then eventually that shell will erode and won’t be able to contain his Ember anymore. Also, it (unfortunately for me) means that if he’s killed in battle and his body is ruptured, that exposes his Ember which would likely flicker out because of the failing magic in the world
The thing with Eylo is he has this kinda Buzz Lightyear thing going on where he believes he was this Level 20 paladin who was famous and renowned throughout the land - and he’s been cursed by a witch and trapped in the body of a teddy bear. As far as he’s concerned part of the curse is that nobody recognises his name anymore and all his big heroic deeds have been forgotten. Not to mention he’s lost a bunch of his powers and abilities (knocked back down to Level 5 essentially)
So none of that is real. Sir Eylo Warrensworth never actually existed. He was made up by the little girl’s dad and he told her bedtime stories about his adventures every night.
So that’s why Eylo believes that he was this famous knight. The little girl’s dreams about these stories are all contained within her Ember and that’s what’s brought Eylo to life so he’s basically personifying this child’s innocent impression of a noble, heroic knight.
But he doesn’t know that. He just fully believes he IS this knight
Again, I’ll give the full story that ties his actual origin and his believed origin. I just need a chance to type it out for you. It won’t be massively long, there’s just a few small bits I left out there