Diamond Lake is nestled in the rocky crags of the Cairn Hills, three days east of the City of Greyhawk, to which it is subject. The region is extremely dangerous. Craggy hills provide shelter for all manner of foul beasts. Southward lies the nasty Mistmarsh Swamp, populated by tribal lizardfolk with no love for outsiders. Dark woods lurk all around. In the hills surrounding the town, hundreds of laborers spend weeks at a time underground, breathing recycled air pumped in via systems worth ten times their combined annual salary. The miners are the chattel of Diamond Lake, its seething, tainted blood. But they are also its foundation, their weekly pay cycling back into the community via a gaggle of gambling dens, bordellos, ale halls and temples. Because work in the mines is so dangerous, most folk come to Diamond Lake because they have nowhere else to turn, seeking an honest trade of hard labor for sustenance-level pay simply because the system has allowed them no other option. Work in Diamond Lake, for some, is a last honest step before utter destitution or crimes of desperation. For others, it is the first step in the opposite direction: a work assignment to ease the burden on debtor prisons, one last chance to make it in civil society.
Most folks in Diamond Lake know little about the history of the shithole they call home. Supposedly, the area near the lake used to be owned by an actual Lord a long time ago. He built a keep, which currently houses the Garrison. There are also a lot of old fences in the cairn hills where he tried to get his farming subjects to grow carrots and potatoes (a doomed prospect). At some point, his sons started exploring the cairns and old gravesites that litter the entire area. Apparently they found quite a bit of loot from the olden days… and not like 50 or 100 years ago, either – the really olden days. Like, from before recorded history when legend says fiends and other creatures from the planes walked Oerth. Soon, all that loot attracted the attention of Greyhawk, and before anyone could blink, they bought off the noble’s kids and annexed the whole area for themselves. They hired adventurers to explore it all, and sucked every last treasure dry from those old tombs.
That would have been the end of Diamond Lake, except prospectors and surveyors came in and took measure of the land. It’s still crap for growing anything but weeds, but they were surprised to discover a healthy cache of silver lodes and many massive veins of iron under the hills.
Now, years and years later, it’s said that that Diamond Lake is the cornerstone of Greyhawk’s ore supply. It’s hard to believe, given the squalor of the place, but folks insist it’s true. It’s not like Greyhawk passes any of that wealth on to the common laborers, though. It used to be that getting a meal was as easily as casting a line in the lake. Now, the smelting house and associated runoff has polluted the water so much, the merchants have to send off to the City just to get weeks–old, salted flounder.
As far as recent history goes, there isn’t much to tell. Honest folk are still getting screwed and the wealthy are still getting richer off of the sweat of the laborers. Aside from that, there’s an old ring of menhir stones outside of town. It’s visited by rangers and druids and other freeloaders. No one knows who built it, but they say the worn stones have been there for centuries.