Recently, technological advances have allowed scientists to create beings bearing likeness to all sorts of fictional characters. These are made using mostly simulation - however, the only part that is not is the brain, part organic and part AI. The AI's only true significance is for the false memories based off of their media, whereas the organic part contains real memories. These experiments were kept in labs for many years before they were leaked to the public.
When word first got out, the opinions were mixed. Some liked the idea of having, for instance, super-powered loyal pets to protect people, but others feared the consequences of having these dangerous characters. After all, what if they wouldn't integrate well into society? Not only that, but there were many difficult copyright issues involved. Eventually, the idea was scrapped, but the experiments were far too precious to destroy, even though people had been assured that they had been. But one day, decades later, after the one of many laboratories with these experiments in them was abandoned, disaster struck. A tornado swept up the city, leaving nothing but ruins after the people had been evacuated. The lab was destroyed as well, except for the experiments, which were still in suspended animation in the basement. Abruptly awakened, they began to explore the city, not knowing how they got here or what had happened. Gradually, everyone began to settle down and a community formed, going so far as to driving out the humans when they came back and even receiving characters from other labs who had escaped. Slowly but surely, the city had been restored, the ruins gone and the buildings rebuilt. The city, while it was no longer referred to by its actual name, was simply called "The City". It became infamous to humans and fictional characters alike.
The City has always been torn between its inhabitants, as in the worlds of fiction there are often clear divisions between who are considered "heroes" and "villains", and even those who are mostly neutral or chaotic neutral will often choose sides. Eventually it was split in half; the eastern half was run by the heroes and those who affiliated with them, and vice versa for the villains. Squabbles over territory would sometimes occur, but overall the two sides managed to remain cut off from each other. However, this soon proved to be no good - because of The City's lawlessness, the heroes always found it necessary to utterly punt the villains into next Tuesday to keep things orderly. That, and it gave them something to do. It was decided that there needed to be a pact, the only way to unite the two sides without fighting. But it will be difficult to get over past relations. Past relations that never truly existed... When they day comes, the truth will set them free.