User blog comment:TheCarrotSaysYumYum/Dragons, People and Demons.../@comment-4223231-20120721152628/@comment-4829046-20120722152711

So in other words maybe Dragons are banished to Edolas at certain times. In X777 they were banished yet again but this time decided to leave behind a legacy to face the inevitable battle between Demons and Humans. Perhaps the previous Dragon King festival was a disaster and was the beginning of Zeref's rule or something. When the Dragons were banished the previous time they probably interacted with the Edolas humans as well, but in time Dragons slowly became more and more seclusive so humans of Earthland and Edolas knew them from myths and legends only.