Materia is crystallized Lifestream, carrying with it the lost knowledge of the Ancients. Using it allows someone to tap into that knowledge, teaching them how to manipulate and unleash their abilities.

Thus, in the days of the Ancients, they didn't need Materia. It was already a part of them. What if the reason they were so nature-loving good guys was because of the Black Materia? They didn't create a planet killer, they purged part of themselves. They removed the negativity, that part of them that would harm the planet, and they crystallized it away, where it couldn't influence them anymore, so that they could go on and become the nature loving pacifists we all know.