Queen Azhsara's story takes place around 10,000 years ago. In that time period the night elves were the most sophisticated society in the world. The upper classes in this society called themselves Highborne; Queen Azshara was obviously highborne, and her and the other Highborne saw themselves as better than the rest. Despite that rift between the classes, all of the night elves still loved and worshiped Azshara.
The night elves had the Well of Eternity where they drew their magical powers from. In time they would draw so much power from the well and abuse the magic in such ways that it drew the attention of Sargeras (sort of like the devil in warcraft). Sargeras told Azshara that he was coming so she and the other highborne started working on a portal to bring him into our world. They saw the rest of the world as imperfection, and Sargeras would be sure to cleanse it all. But the well of Eternity wasn't powerful enough to make such a large portal so she cut off the magic for the rest of the night elves. The night elves of the city went to the palace to ask their queen what happened to their magic. When they did the demons of the Burning legion marched through the portal and started to kill all those who weren't Highborne. But Sargeras was so powerful that he couldn't instantly step through such a small portal, so he sent in lesser creatures first, and over time their forces grew.
When the rest of the night elves became aware of their plan, they grouped up to stop them, along with a few highborne who did not want to live in a world "purified" by sargeras. The group defeated Mannoroth, the demon who was keeping the portal open for sargeras and used the power of the dragonsoul to suck all the demons back to their own realm. Doing so made the well of eternity very unstable and it began to implode. Queen azshara was in her tower when this happened, and the waters started pouring into her chambers so she created a magical shield to protect herself and her servents. But she couldn't hold the shield forever under the crushing power of the water. Then whispers came to the queen from The old gods (very powerful beings who strive for chaos and destruction)
"There is a way...you will become more than you ever were...we can help...You will be more than you have ever been..."
She agreed to the whispers; The shield faded, but they did not drown. They transformed into the beings we know them as today, the Naga.
"...and when the time comes, for what we grant you...you will serve us well..."