Theory of Magic on Azeroth

Here's my theory on the source of magic and how the Well of Eternity, Sunwell and the Eye of Dalaran fit into it:

All magic on Azeroth originated from the Twisting Nether. When the Titans arrived, they created the Well of Eternity to speed up the terraforming of Azeroth. Norgannon, being the cataloguer of magic, was probably responsible for it's creation. Using the Well of Eternity as a conduit to the raw power of the Twisting Nether, they amplified their own powers, kicked the Old Gods around, shaped seas and mountains, made things grow and so on. The Titans finish their work and teach/modify five dragons on how to use the Well of Eternity. They leave the dragons to guard it, pack up and leave.

Note that at this point, magic only exists near the Well of Eternity, in the Five Aspects and nowhere else.

An unnamed troll tribe wanders near the Well and mutates into Night Elves. They begin to dabble on magic. This dabbling catches the attention of Cenarius, who becomes their mentor. The ancient Night Elf civilization is born. Despite Cenarius' warnings, they continue to dabble with magic and build the magical city of Zin'Ashari around the Well. They catch the attention of Sargeras.

Having lived in the Twisting Nether for ages, Sargeras and the rest of the Burning Legion have started to consider it their turf, and don't like the Night Elves siphoning "their" energy. The Burning Legion convinces Xavius, Azshara & co to shut down the spells distributing magic to the rest of the Night Elf civilization. This accomplishes two things. First, there's more magic to be used for enlargening the portal, and it stops the Night Elves from stealing "their" magic. Felhounds are dispatched to leech magic back from any beings that contain it. However, these events alert Malfurion, Illidan and Cenarius. After some fighting, the Highborne and the Burning Legion forces that already arrived get beaten back, the Well implodes and scatters large amounts of magic energy around the world. However, Illidan did have time to scoop up a few vials of concentrated magical energy from the Well before the implosion. A few of these vials are used to create the new Well of Eternity, an another conduit to the Twisting Nether. One vial is used by the Highborne to create the Sunwell in newly found Quel'Thalas.

The implosion of the Well created the current conditions where magic can be wielded all around Azeroth. The ambient magic can be accounted for the natural mana regeneration of the mages of various races. In addition, experienced mages can tap directly into the Twisting Nether (Evocation) whenever they need more power. This is both tiring and dangerous, though. Because the Burning Legion is continously looking for thieves stealing "their" energy, long-term conduits need to be shielded. Otherwise the Burning Legion will track them down and kill or enslave the spellcaster.

Fast-forward a few thousand years. Forest trolls keep attacking the High Elves, and they have to enlist the help of the humans. Dalaran is founded, and yet another conduit, the Eye of Dalaran, is created to power the spells around the city. While magic can be wielded anywhere, it is much easier to use it in the vicinity of established conduits, because there's more ambient energy around. In addition, the output of the conduit can be increased when necessary for large spells. Having lived in a magic-saturated environment for generations, the High Elves get used to it, just like their Highborne precedessors got used to living near the Well of Eternity.

Fast-forward a few more hundred years. Horde invades and steals the runestones protecting Quel'Thalas from detection. The demon-controlled Horde ultimately fails in it's task, but Quel'Thalas is nevertheless exposed and becomes known to the Burning Legion. Ner'zhul orders Grom & co to steal the Eye of Dalaran. He uses this conduit to power his portal spells, but lacks the know-how to keep them stable. After failing to create stable portals, Ner'zhul escapes from the doomed Draenor and is captured by the Burning Legion. He is turned into the Lich King and is sent to Azeroth.

Fast-forward a few years. Dar'khan screws things up and severs the connection the Sunwell has to the Twisting Nether. Nevertheless, enough magic remains in the Sunwell for Arthas to reanimate Kel'Thuzad. Kel'Thuzad summons Archimonde, who immediately punishes the mages of Dalaran for "wielding our fire as their own". Now that both the Eye of Dalaran and the Sunwell are out of commission, the only remaining conduit on Azeroth is the Well of Eternity under Nordrassil. The Burning Legion travels to Kalimdor.

Archimonde ultimately fails and the Burning Legion is unable to both shut down the remaining "leak" and to reclaim the magical energies still remaining on Azeroth.

Meanwhile, the High Elves are in serious withdrawal and are having difficulties adjusting to the normal levels of ambient magic. Kael'thas finds Illidan, who instructs him on how to tap into magic-saturated demons themselves. Rommath is sent back to Azeroth to instruct the remaining Blood Elves and brings along the Naaru captured from the Tempest Keep. Armed with both the knowledge originated from Illidan and the Naaru, the Blood Elves rebuild Silvermoon using their new magical energies. The big green floating stones found around the city are captured demons used to power the gravity-defying architecture of the Blood Elves.