"Just what the fudge is this Kouma Senso thing I keep readin about?" is something you might be asking yourselves right now. Well, fear not! The all powerful Miko is here to set you on the path of Love, Justice an- oops.... wrong speech... *throws her 'Ten Sure Fire Ways To Be Like Amelia' book behind her and grins sheepishly* Well, the Kouma Senso is the War of the Resurrection of the Demon King or War of the Demon's Descent. There are more variations to this but these two are the most accurate in my opinion.
Let's start from the beginning. Ever since their creation, Flare Dragon Ceiphied and Ruby Eye Shabranidgu have been fighting for control of the world. About 5,000 years ago Ceiphied split Ruby eye into seven parts and sealed them inside seven humans but Ceiphied, weakened from the fight, sunk into the Sea of Chaos and left behind 4 parts of himself: the Earth Dragon Lord, Water Dragon Lord, Fire Dragon Lord, and Sky Dragon Lord, to defend against any part of Ruby Eye that might be awakaned. Each dragon lord guarded a cardinal point: the Water dragon to the north, the Earth Dragon to the south, the Fire dragon to the west and the Sky Dragon to the east.
Then, about 1,000 years ago, Hellmaster Phibrizzo decided to resurrect one of the seven parts of Ruby Eye (more specifically, the one sealed inside Lei Magnus) and succeeded. The Demon King of the North (as it was called) waged war against the Water Dragon Lord. In order to weaken the Water Dragon Lord's powers, each of the Dark Kings positioned themselves in one point of the Kataart Mountains: Dynast in the north, Deep Sea to the west, Zellas to the south, and Phibrizzo to the east and formed a barrier that could weaken and make him unable to get help from the other Dragon Lords.
During this, the resurrected part of Ruby Eye used Chaos Dragon Gaav as the channel through which he could use his power and attacked the Water Dragon Lord (his and Gaav's power combined evened the power between he and Water Dragon Lord. Remember - Ceiphied split into four pieces and Ruby Eye seven). Meanwhile, the priests and generals of the Dark Kings and the lesser mazoku fought against dragons, humans and elves. Most of the dragons, who came to help the Dragon Lord, were killed single-handedly by Xelloss.
Also during the war, the Gold Dragons faced a problem. The Ancient Dragons decided to not participate in the war. Ancient Dragons were far more powerful than Gold Dragons (and were scared of them to a certain extent), so they thought that by not participating, the Ancient Dragons were waiting for a right time to take over as the dominant Dragon race. So the Gold Dragons killed all the Ancient Dragons. In Try it is revealed that one Ancient Dragon did survive: Valgaav, but that's another story ^_^.
In the end, the Water Dragon Lord won (but just barely) and killed Gaav. Then he froze the resurrected part of Ruby Eye in ice in the north (hence why he's called the Demon Kind of the North) and then sealed Gaav in the body of a human. The Water Dragon Lord, very weakened, died and his thoughts and memories became what is now known as the Claire Bible.
Note: I want to give credit Mazo! and Slayers Universe 4.0 for their excellent explanations of the Kouma Senso. Also to Slayers Universe for the diagram of the Mazoku Hierarchy. Anything other detail was taken from the anime.