According to Deckard Cain's description, after the angels and humans defeated and sealed the seven demon heads into the Soulstone, the human world indeed enjoyed several hundred years of peace.
Just like Duanmu Huai mentioned earlier, since there was no way to completely eliminate the subspace creatures, sentencing them to life imprisonment and locking them away was considered a better approach. At least if nothing went wrong, these beings could be kept locked away until the end of the world.
The premise is no one stages a jailbreak.
But there's always a fear of unforeseen incidents.
Several hundred years later, a royal member named Leoric brought his subordinates, under the orders of the Holy Church at the time, to govern this place.
However, at that time, Leoric didn't know that this land without an owner was not a good place. Beneath it lay a ruin, and within those ruins was sealed Diablo, one of the three Prime Evils.
Was this a coincidence?