The Great Cataclysm was an event that involved the destruction of the Dark Tower and a lot of the surrounding land, as well as causing a magical disease violently twisting the appearance and personality of people, creatures and even minions as well as the land, turning it into a black wasteland covered by Magical Slime. It happened shortly after the minion exodus started
Relatively early in Overlord II, while exploring the Wasteland that was once the area around the Dark Tower, Gnarl comes to the realization that the Great Cataclysm was the result of the Tower Heart exploding. Near the end of Overlord II it is revealed that Florian Greenheart tried to steal the Tower Heart's magic, but caused it to explode, resulting in the Great Cataclysm and the Magical Plague.
The great cataclysm was caused by Florian not having any magic, and him being teased by the other Elves, driving him to find a way to gain magic powers. But Florian didn't know where the Dark Tower was and Rose seemingly wanted to place revenge on the Third overlord for dumping her for Velvet, seen once before as she led the Second Overlord to the tower, (Even though the Second overlord already knew the location), for revenge. Shortly after the exodus began Florian had caused it to go unstable (again) and cause the tower heart to explode. It is possible that Rose and Florian suffered minor symptoms of the Magical plague, since they were presumably near or inside the tower when the Tower Heart exploded, such as Rose changing in personality while Florian pretty much has developed minor magic powers, like being able to walk in the ooze of the wasteland without being infected or harmed. Gnarl has mensioned that Everlight is the ancient retreat of the elves so if the third overlord was evil than any surviving elves would have retreated to Everlight as the third overlord wouldnt have found everlight. The fact that the elves are more useful in overlord 2, the elves in the first game went extinct.
The Great Cataclysm caused more chaos in the world ,the power void previously left by the dissapearance of the Overlord threw the world in total confusion ,and later the destruction of the Dark Tower,the forming of the wasteland and magic caused fear due of the illness that surfaced immediately after,allowing Florian to turn that fear in hatred for magical creatures and forming the Glorious Empire