I had an idea after writing that last post.
When 3e first came out, I joined a game where I played a two-weapon fighter. Part of my fighter's background was that he was born on Five Pillar Night, a holiday in the St. Cuthbert religion. The details of this holiday were simply that five gigantic Flame Strikes fell from the heavens onto an invading army, shattering it in a matter of seconds.
I imagine something similar could have happened in Trokair. I am currently entertaining the idea that the original society of Trokair fell when the portal to the Abyss opened and demons swept across the land. It could be that, after establishing a few settlements further inland from Wyndhaven, some of these demons appeared and wiped them out with huge pillars of flame in the middle of the night. That would also explain the reticence to expand further.
The old idea of humanoids prowling about in armies begs the question - what happened to them? It could be that the army of Wyndhaven exhausted its numbers fending off an attack, leaving both sides reeling (though the humanoids would be able to recover more quickly, leading to the building of the Wall).
This new idea also begs some questions (why is Wyndhaven still inhabited being a major one) but it does hint at the demonic forces that lie further inland.