ok i got this from reddit so credits to the person who made it

madness lore but simplified

15 years ago, there was Nexus City and Director Phobos, Phobos ran Project Nexus, a sort of soul Recycling Program designed to bring back people who died, this created a few "Undesirables" 1: The Zeds, they were the prototypes and were made en masse. 2: The abominations, Prototype 2 and were a little more successful however, they still showcased extreme aggressiveness and Zed-like tendencies. 3: Sleepwalkers, essentially the "Successful Prototype" however after effects did include a sort of dreamlike state hence the name. 4: The scientists, due to the copious amounts of dissonant reality they were exposed to, scientists slowly went insane, all of which were relocated to the asylum along with sleepwalkers.

With all this in mind, Phobos saw this as a chance for profit and power. They managed to streamline the resurrection's however there were still Zeds being produced, Phobos didn't care and ruled over Nexus City with an Iron fist until Dr. Jebediah Christoff and Dr. Hoffnar went rouge and killed Phobos, thus plunging the city into chaos for 15 years. Christoff left with the Keystone Fragment, took on the name Jeb or Jebus and Hoffnar attempted to keep the city as intact as possible before going insane himself and becoming a clown by the name of Tricky.

As for the events of Arena Mode, this took place before Phobos was killed, a Singular Grunt taken from the nowhere had the sole purpose of keeping The Machine in check by enacting a constant loop.

15 years later and now we're at the events of the main timeline, Hank kills people because of a boombox, Sheriff steals his pie or something so Hank kills him after he activates an Improbability Drive, he also kills Tricky before he becomes zombified. Eventually he kills everyone at Club M before killing himself to take out Jeb. It's at this point while Doc was reviving Hank, the Auditor made his way into Nevada and created the A.A.H.W. after buying out the 1337 crew. He primarily focused on the A.T.P. and borrowed cloning tech from the Nexus Core due to an outstanding contract 15 years prior. Eventually once Doc is done, he realizes that the Nexus Core have made their way into Nevada Central and have captured Sanford and Deimos. Hank Frees them and together the 3 of them take out the Nevada core before making their way into Nexus City.

The three make their way into the city before splitting up. Hank makes his way to find Hoffnar (Tricky) and Sanford and Deimos find the Sheriff in the industrial sector and find a cult in the mining sector. Hank meets up with Christoff and they collect the Keys to a machine Hoffnar invented called the Divergence Engine. They also run into Gestalt before sending him to the mining sector. at the same time, he falls on top of Sanford and Deimos before the two manage to evade him. Eventually the 4 meet up in front of the Science Tower and commence a final assault on the Nexus Core. Eventually they reach the top where they have one final fight with Gestalt and learn that Phobos has been living inside Gestalt as an S3lf. Eventually they manage to banish Phobos to the Other Place and kill Gestalt. Afterwards Hank betrays everyone by attempting to destroy the project himself as that was his original mission, however if does both the Earth and the Other Place will implode, so Sanford and Deimos kill Hank. Afterwards Christoff meets with the Sheriff and the Employers who tell him that they'll be dealing with Hank personally. Hank is resurrected yet again with his armor downgraded for his failure, Sanford and Deimos are stripped of their armor in order to lay low and the events of Madness 5-11 happen as you know them. At some point Tricky was hired by the Auditor to join forces to deal with Hank, even receiving an Improbability Drive of his own to stand a chance.

Thank you for coming to my TED Talk, now get out.