The colonists survived but forgot large sections of their early history. This resulted in their available technology falling to an early medieval/pre-steam era. Magic is now not only possible but relevant and usable. The ability to use magic seems innate.
The initial fragmentation led to the rise of idiosyncratic authoritarian communities, each with its own beliefs. With little to no communication between the communities, the rise of magic and wondrous creatures caused many of these communities to form ossified, intolerant city-states. This ultimately led to the city wars, where belief was pitted against belief.
The devastation caused by these city wars, combined with an intolerance of the then-societal norms, led to the great migration. People tired of the intolerance and authoritarian nature of the societies in which they were born led to a significant proportion of them moving to more accommodating areas and forming their own settlements. These wars led to the fall of most of the city-states and the eventual rise of various empires.