I don't understand it really...
Had Warband not changed the map to accomodate the Sarranids, you'd probably more easily understand how the story kinda fits in. It's probably far more easily to explain if you have knowledge of the old M&B map, which I presume you don't.
So here's the old map to make more sense:
Yellow: Nords
Orange: Swadia
Green: Vaegirs
Blue: Rhodoks
Purple: Khergits
Basically, there's a largish divergance of events, with Calradia clearly being a really minor part of the world.:
You know the old "Calrad Empire" hinted at in M&B lore? Well, here it's the
Ellisian Empire, which is basically Rome/Byzantium, as the Calrad Empire is hinted at being.
It collapses, as per M&B, but retains the heartlands of Ellis. These lands were, in M&B 1.011 (and older) where the Rhodoks were located i.e. Ellis effectively replaced the Rhodoks.
However, unlike M&B-lore, Swadia goes and conquers the Nords. It then undergoes a civil war and the Imperial State (which I presume you are somewhat familiar with by now) springs up as a result of this alternate history thing. Lauria, another state from the north, promptly captures former Nordic lands in Calradia.
By the time of the latest version of the mod for Warband and M&B, Ellis has been conquered by Swadia and then again conquered by the Lion Throne, who were supporting the collapsing Ellis. The Khergits have been replaced by the Ormelis by way of a coup, iirc, but the Khergits still exist off-map. The Grand Duchy is a map-expansion like the Imperial State and have kinda existed there all the time; the Sarranids are said to exist somewhere again off map, along with the rest of the Lion Throne. Haelmar invades to counter Laurian ambitions in Calradia; the HU itself is a union of nordic states.
It really is quite difficult to understand with a purely Warband knowledge of the strategic map, but it's really quite simple once you know the old M&B map & factions and some of the basic lore.
In summary:
Different map, "Calrad Empire" survives longer but still fractures into the distinctive states. Nords pushed out and eventually replaced by Lauria. Swadia splits into two states, the HSE and the IS. Ellis is defeated and eventually is replaced by the Lion Throne, a worldwide superpower that has ambitions in Calradia. Khergits are booted out by Ormelis and some other factions including the descendants of the Nords and some generally nice-guys join in the fun.
Rhodoks never existed.