God was not satisfied to stop with the archangels. They had no concept of the preciousness of existence, or of their own former lack thereof, because they were eternal. God then created Earth, the first mortal world and the first realm that was not Heaven. It furthermore created humans to rule the earth.
God liked what It saw on Earth, and created many other mortal worlds. However, Earth remained Its favorite world, and humans Its favorite creaures. Eventually, God optimistically granted humans vast powers, allowing them to create life just as God did.
Lucifer became jealous of the powers God granted the humans, and demanded to know why It loved and blessed them above the arch angels. God explained that everything is precious, but that humans were the heirs of Heaven and thus most precious of all.
Lucifer was not pleased. She renounced her faith in God and began a rebellion against It. The arch angel Uriel, the human angel Lilith and many other angels joined her. God was saddened by this, since Lucifer was Its favorite, but rebellion is rebellion. Lucifer and her followers were banished from Heaven, and Lucifer was given the name The Fallen One.
The Fallen One was still as angry as ever, and did not stop fighting God. Her rage corrupted the mortals, who turned against each other and invented war and cruelty. Even the humans weren't immune, and they stopped using their powers well. God was forced to remove most of their powers, but nothing stopped the madness.
The Fallen One told God that this was to be expected from creatures with free will, unguided and unpunished, and said that her own rebellion was no different. God realized that she was right. She then proposed a compromise. If God would create a kingdom for the Fallen One to rule, she would use it to collect those who had done wrong and cause them to repent. God agreed and the kingdom of Hell was created.
God decreed that mortals would have to earn their way into Heaven, and defined the Seven Virtues that would bring them closer to Heaven and the Seven Sins that would bring them closer to Hell. Each sin and virtue was embodied by a powerful spirit creature. This system brought mortals back to the path of Heaven...mostly.
The Fallen One was still not content, however. With Lilith's help she created the first demons and set them to war against the rest of Creation, twisting and corrupting what they couldn't destroy.
God realized that the Fallen One was beyond forgiveness, but It still needed Hell, for the same reasons that Hell was created in the first place. The only solution was to keep the demons contained, and shield the mortal worlds from their attacks. The warrior angels were created to do this, and are still doing it today.