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Anima Town is the capital of Eltalor, towards the north of the country. It was first created on TSWCAtS V1 as what can be assumed to be a port village, but all other iterations seem to merely be set beside a lake or river. Though inconsistent, the general consensus is a resounding "eh, screw it, alternate universes".
Despite V1 being the first, the V5 iteration bears the most resemblance to how it's described within Proxy's work (and is incidentally the most polished despite it still being a work in progress).
The Founding of Anima Town
The Tigress and the Felis
About 500 years before what we consider to be the present in roleplays, the only part of TSWCAtS that was inhabited was the broad forest that is now home to the Tigress.
As a matter of fact, the name "Tigress" meant something a bit different back then from what it means in the present - it referred to the tribe of the catlike species which was completely made up of pureblooded anthropomorphic tiger people - and only tigers, nothing like leopards, or Siamese cats, or anything of that ilk. In the present, the term "Tigress" refers to all of the anthropomorphic cat people who live in TSWCAtS - every tribe of them, whether they live in the woods or not whether they resemble other types of cats or not.
This tribe of tiger people was at constant war with another tribe of a very similar catlike species, the Felis, who, instead of resembling tigers, resembled a variety of different types of cats - lions, leopards, pumas, jaguars, panthers, and many more.
The Tigress were prejudiced against the Felis and considered them less pure and of value than they were. Their blood was mixed with so many different races, while the Tigress all had the same orange and black stripes. There were more Felis than there were Tigress, but their number began to dwindle as the war went on, as the Tigress were ruthless fighters. The Felis were beginning to lose, and the outlook was bleak, up until two brave heroes rose from each tribe.
Eis Anima and Lux Nocte
A Felis who resembled a lion, called Eis Anima, was born during this disastrous war. Nobody could entirely agree on what gender this particular Felis was, and quite hilariously most people were afraid to ask. Back then transgender people were fairly uncommon - especially between the Felis and the Tigress - so when using pronouns, people were often at a loss and muddled the pronouns together hoping nobody would notice. One second they would refer to Eis as a "he", the next as a "she". Eis notably never corrected them. Perhaps he just didn't care about gender, or quite possibly she just found it amusing.
Ever since Eis was a child, he had a penchant for magic, and was born with the ability to turn into a lion, which was a talent that some Felis and Tigress posessed. She wanted to learn all he could. She often fantasized about using his powers to end the war - it was obvious how much she hated witnessing so much violence and terror. All he wanted was peace.
When Eis was very young, she inadvertently ventured into Tigress territory and befriended a Tigress named Lux Nocte, who preferred to only go by her surname. Like Eis, she had interesting, non-stereotypical views on gender, and did not care whether she was referred to as 'he', 'she', or 'them'. The two hit it off and did not care that they should have been enemies due to the warring tribes. They met in secret and were the best of friends throughout their childhood and teen years.
By the time Eis and Nocte were about 17 years old, humans immigrated into TSWCAtS from Trelle, Ofeilia, and even the Myth Lands, and into the Tigress and Felis's territory. This led to yet another war, as neither the Tigress nor the Felis took kindly to the strange humans entering their forest. Even when they were just nearby their forest, it was still too close for their liking. They were afraid they would damage the woods.
There was so much discrimination and prejudice against everyone. If you weren't a filthy human invader, you were impure Felis scum, or a barbaric, bigoted Tigress. Eis and Nocte felt they could do something about this and play their part in the war, so they became more vocal about their views and ideals. They managed to gather an organization of people who shared their views - of all races, Tigress, Felis, and humans gathering together to try and create a place of peace.
They fought for their rights and peace, and eventually managed to get so many people to join their cause that all who opposed surrendered. A town near the woods was settled by this organization, and a peace treaty was signed. This town was called Anima Town, named for one of its two founders.
The Madness of Lux Nocte
Eis and Nocte clearly were attracted to one another, and nobody could deny that they were the best of friends. They had begun dating not long after Anima Town was created.
However much Eis and Nocte loved each other, Nocte was a Tigress, and many people assumed that they were a bigot, considering the Tigress had a tendency to ramble on how the humans and the Felis have "impure, tainted blood". So most people had a tendency to ignore the fact that Nocte played a massive part in founding Anima Town: Eis got most of the credit, and Nocte was shunned.
Nocte got increasingly resentful of Eis, and could not figure out why he was so oblivious to how little Nocte was praised, when they were clearly equal in how they had created Anima Town and ended the wars. Nocte became very envious and no longer seemed like themselves. They suddenly had a lust for dark magic and power, and seemed to become almost sadistic.
Nocte was very, very taken aback and infuriated when one night Eis proposed to them. An argument began between the two. Eis didn't understand, mainly since Nocte was not explaining himself very well, and it got violent very fast due to all the pent up anger and resentment Nocte withheld. It turned into an all-out magic duel. Nocte threatened to use their dark magic to shroud Anima Town in eternal shadow. Eis pleaded and threatened to no avail, and had a choice between letting Nocte destroy the peaceful land they had created together, or killing the one she loved. He chose the latter...and had to live with the guilt of destroying her lover.
Nocte's spirit was so filled with hatred, envy, sadness, and not to mention the heaps of dark magic and spells they had cast upon themselves to attempt to cheat death, they became nothing less than the manifestation of envy, lust, and vanity, and therefore were not able to "go on" like the normal spirits of the dead. It also had to do with being destroyed by the person they loved most. This drove Nocte to become a vengeful spirit who wants the love and admiration of others, as well as develop a desire for others to feel their pain.
Nocte seemed to have lost all traces of their former sanity and affinity with peace and harmony. They began to use their magic to manipulate others, shapeshifting into the form that they thought would be the most attractive to their victims. This allowed Nocte to manipulate people into thinking they are the only one they can trust or make them envious of their good looks and fearful that they may steal their love interests away. Nocte fed off of the jealousy and desires of others in such a way that allowed their magic to grow stronger and stronger, until they were no less than a shapeshifting demon of lust. As well as causing others to feel what they did when they were envious of Eis, Nocte also fed off of their victim's love for them, possibly seeing it as a replacement for Eis.
Throughout history, Nocte has appeared and caused discord between the citizens of TSWCAtS using their sleek tricks and powers. Some people have identified Nocte as a "demon" or an evil deity, though nobody ever concluded that it is the spirit of Lux Nocte. Nobody can quite agree on a name, but they are most commonly called Vanity, Lust, and Envy. Nobody can exactly tell when this "demon" will strike, and nearly anybody can fall victim to them.