From Bookworm's A New History of Equestria
When Queen Alternia, unbeknownst to all, took the throne in 0 CR (Celestia's Reign), Equestria itself was a fairly small state. There were three, originally anyway, population centers: Manehattan (for the earth ponies), Cloudsdale (then known as Pegasopolis) and Unicornia (located where Hollow Shades currently is). Celestia and Luna had ruled from Everfree Castle, and it had been Equestria's capital, but the alicorns had rather wisely chosen not to overpopulate the dangerous area, choosing instead to just keep administrative staff and their closest advisors there. The Pegasi Exarchs (military governors), Earth Pony Bannerponies and Unicorn nobles would spend time in Everfree Castle, but had a great degree of independence to rule their own polities surrounding Pegasopolis, Manehattan and Unicornia.
Upon the destruction of the Everfree Castle in the battle between Luna and Celestia, Queen Alternia found herself without a capital. Needing to solidify her position and not wishing to offend any of the three races, she ordered the construction of a new capital.
The earth pony architects Duke Golden Triangle of Manehattan and Baron Byzas of Trottingham selected the site over the ruins of the original Canterlot that had been built when the three tribes had come to Equestria. The city, which had been abandoned during the reign of Discord, had fallen to ruin, but Byzas and Golden Triangle quickly realized that this was an excellent defensive position and was fairly well located between Unicornia, Pegasopolis and Manehattan.
Construction quickly began, with the pegasus architect Vaultaire of Stormwrath and unicorn designer Chartres planning the palace. The defenses of Canterlot were designed by the pegasi military architect, Exarch Barbican of Cloudsdale.
However, the castle hadn't even been quarter completed when the Griffon Vikings under Warlord Harald Hardbeak of Griffonia attacked Equestria. He was going to be joined by another Griffon warlord, Blackwing, sometimes known as the Terror, but in a stroke of coincidence, he had engaged a changeling hive en route to Equestria and suffered heavily losses.
Harald’s War Wings initially struck Manehattan, but the defenders led by Lord Barbican's then fiance and later wife, the earth pony Lady White Tower of New Yoke (an earth pony town that was later absorbed into Manehattan) repelled them at the Battle of Stands Fjord Bridge. Smarting from his defeat, Harald joined with Duke Wingtip the Bastard, turned to Unicornia. They overcame the defenders and razed the city to the ground.
Unable to immediately overcome their forces, Princess Alternia and her army, led by Lady White Tower, accompanied by the remains of the Unicorn nobility led by Prince Blueblood the first of his name, and reinforcing pegasi led by Exarch Barbican, thus lured the Viking army southwards to the Badlands through hit-and run tactics. At the edge of the Badlands in the Battle of Hatsings, the Griffon Vikings were destroyed.
Acting to consolidate her position, Alternia had Canterlot Castle finished. From there, she started to encourage the southward of Equestria by earth pony, unicorn and pegasi settlers. According to records at the time, the expansion followed what would become the eastern coast of present-day Equestria, due to the need to cut the Griffons off from gaining any more land on the continent.
By 250 CR, the town of Fillydelphia was founded and it was soon followed by the town of Baltimare. Both were basically outposts for a slowly expanding Equestrian Kingdom, but all were rapidly growing. It was at this point that the 1st Griffon-Equestrian War began.
Princess Alternia had managed to keep the peace for a while due to the fact the chain of castles and outposts that stretched down the eastern coast deterred Griffon expansion. Furthermore, at least during the years 150CR to 211 CR, she had maintained a very close, rumored to be romantic and intimate, relationship with the Viking High King Ironwing the Featherless, the last of the Griffon Viking kings. Ironwing's immediate successor, Sharpfeather the Wise, maintained this peace, but his son, King Bloodbeak the Magnificent was not so inclined.
Bloodbeak launched a massive cross-sea invasion of Equestria across the northern part of the Eastern Sea, which was narrower. His flock of Griffons overwhelmed and conquered the island outpost city of Trottingham before swooping down toward Manehattan. For ten years, the Griffon Army led by Bloodbeak sparred with the Equestrian Army led by Exarch Thunderhead of Cloudsdale also known as the Hammer of Equestria. So fierce was the conflict it turned areas of the Northern part of Equestria into scrubby barren landscape.
(Author's note: Starlight set her village up in one of the more fertile parts of this area).
Thunderhead finally destroyed the Griffon Army at the Battle of Titan's Forest by a combination of deception and skill. Thunderhead had found out that King Bloodbeak taken the daughter of one of his lieutenants, Arctic Wind, as a concubine against her will and that of her family. As such, Thunderhead managed to turn Arctic Wind against the Griffon King and convince Arctic Wind to lead Bloodbeak into the Titan's Forest. Thunderhead then surrounded the forest in air and on land, before setting fire to part of it to drive the Griffon Army into the waiting jaws of the Equestrian forces. Bloodbeak fled, only to be later slain in a duel by Arctic Wind who was hailed as a hero in Griffonia for ending Bloodbeak’s cruel reign and the war that had raged on for ten years. Arctic Wind then signed a treaty with Princess Alternia and ended the war, becoming King Arctic Wind of the Griffon Kingdom.
The experience of the First Griffon-Equestrian war however taught Princess Alternia and the Equestrian lords, that while consolidating the eastern coast had been a good move, their was a need for more farmland, and to grow a larger Equestrian population in case of future conflict. Much fertile farmland in the north had been burned. Thus, Equestrian pegasi, earth pony and unicorn nobility encouraged their heirs to go west to seek new land.
Unfortunately, in 297 CR, as the settlers slowly moved westward and passed the Galloping Gorge, they encountered a new enemy. The Yaks of the Golden Horde. The Yaks immediately attacked these groups, capturing many ponies. Some of these ponies were sent to Yakyakhistan where they were interrogated by the Yak's ruler, Woolis Khan. Upon learning of the riches and fertile lands to their southeast, Woolis Khan prepared to invade and in 303 CR, he led a massive horde that sacked the westernmost Equestrian settlements. He forced Cloudsdale to be moved eastward and finally arrived at the base of Canterlot itself.
The Equestrians had been completely caught off guard and Canterlot's defenses had never been tested in battle. However, the wisdom and foresight of the city's six architects paid off. As Princess Alternia, her captain Blackthorn, and the Canterlot Garrison defended the city, which had been well-provisioned, excellently located and designed in such a way that after the Yak's had painstakingly breached the city's thick walls, it's meandering streets became a pit of traps for their forces. Meanwhile, Prince Blueblood the 7th rallied the spread out Equestrian lords and their forces and went to Alternia's aid. At the Battle of the Foot of Canterlot, Prince Blueblood duelled Woolis Khan in a fjord across the River Canter. Blueblood the 7th was killed, but Princess Alternia sallied forth from Canterlot into the back of the Yak army, finally driving them off the field and sending Woolis Khan running back to Yakyakhistan. So bloody was the battle though that the Yaks were all too eager to settle for peace and the end of the 1st and only Yakyakhistan War.
Princess Alternia however, was not so merciful. In a rather uncharacteristic, and seemingly foolish act, she ordered the unicorn Baroness Bardaria to lead an invasion of the wintery Yakyakhistan. Bardaria wasn’t exactly a military commander. She relied heavily on the advice of her military advisor, the pegasi commander, Exarch Rainbow Anvil of Cloudsdale. So it seemed puzzling why Princess Alternia ordered this invasion.
It turned out that what Baroness Bardaria lacked in siegecraft and logistical knowledge, she made up with intrigue. Princess Alternia had long knew that Bardaria had contacts in the city of Yakyakhistan, had established spies and informants from within the enslaved ponies that had been taken to Yakyakhistan. As Rainbow Anvil marched the Equestrian Army northwards through the snow, Baroness Bardaria gave Rainbow Anvil the numbers of the Yaks, the layout of the city, poisoned the garrison’s food, and sabotaged the gates.
So when Rainbow Anvil came, all he had to do was force his way through an open gate, kill sick, starving Yak soldiers, and raise an Equestrian flag high over Yakyakhistan. This allowed Princess Alternia to negotiate a respectful, but firm treaty with the Yaks. The Yaks signed a non-aggression pact, whilst having their claims to a number of northern territories were recognized and trade was formalized as well. However, the terms of the treaty made Yakyakhistan pay a significant indemnity to Equestria not of money, but of wool. Wool that proved incredibly useful for clothing that allowed for the settlement of Vanhoofer, and northwestern Equestria.
More settlers went southward past the Smoke Mountains into the area that would become Las Pegasus, which was when they first ran into the Buffalo tribes in 325 CR.
The Buffalo tribes were incredibly territorial. One of the reasons that Las Pegasus had such a significant portion of its city built in clouds was because the Buffalo would only allow pegasi to settle. Conflicts broke out rather frequently though and war was on the horizon. Luckily in 334 CR, Princess Alternia negotiated a treaty with the Buffalo. In return for the right to settle on their land, the Buffalo were given the entire San Palomino desert in return for the river delta that would become Las Pegasus.
Relations with the Buffalo tribes would always remain rather tenuous however, due to pony settlers wandering ignorantly into Buffalo territory that hadn’t been clearly marked out (the Appleloosan Incident being a pre-eminant case). Furthermore, inter-tribal conflicts within the buffalo tribes meant that treaties had to be constantly renegotiated with different parties.
However, with Equestria’s borders consolidating and the kingdom growing in population, peace settled over the land. Monsters were contained to the Everfree Forest and Equestria was finally able to embark into a high-medieval age of exploration, prosperity and self-discovery. Magic studies flourished during this period. The standards of living increased for all and a new artisanal and entrepreneurial class emerged.
Peace brought its own set of problems though. The nobles of Equestria, the Earth Bannerponies, the Unicorn Lords, and the Pegasi Exarchs, did not take peace particularly well. There were few enemies to fight and too much wealth to go around. The Earth Bannerponies did better in that they focused on funding and exploring Equestria. However, many unicorn lords ended up squandering their fortunes on balls, excessive spending, and on alchemical potions to try to extend their lives. Pegasi Exarchs in the meantime grew discontented, often striking out into the unknown on monster hunts to satisfy their lust for adventure and new skies.
The effect of this was that the Equestrian Crown grew incredibly strong. When unicorn, earth pony, or pegasi lords defaulted on their debts, they often were forced to sell their land, or in the pegasi’s case, their services as fighters, to the crown. Alternia as Celestia thus amassed a huge fortune, which she used rather wisely to maintain and expand her influence. She also maintained a rather sizeable group of supporters and faction members that assisted her in that respect.