Well Terra was captured as an infant when the empire invades the home of the espers and takes a bunch of espers as prisoners. Terra is under the control of the empire with the slave crown and when she is older (at the beginning of the game) she is used as a weapon of the empire.

Terra, Biggs and Wedge invade Narshe to retrieve an esper that's been discovered in the mines. When they meet the esper Terra has an odd reaction to it and she wakes up herself, without the slave crown. The empire comes back to Narshe to retrieve Terra and that's when Locke rescues Terra and they flee to Figaro Castle.

While in Figaro Castle Locke and Edgar (the king of Figaro) decide to have Terra meet the leader of the Returners, the rebel group opposing the empire. The group goes to the Returners and has to run from the empire again, and the group goes three different ways.

The three groups all convene in Narshe to protect the esper from the Empire again. After thwarting the empire Terra disappears and the group tracks her to Zozo. Once in Zozo Ramuh asks the group to rescue the espers held captive in Vector.

The group rescues the espers and then goes to the home of the Espers to talk to them. The epsers are released and they attack the Empire, after which the Epire decides to call a truce.

The Empire asks the group to find the espers to that they can make peace. The Empire actually tricks the group and they capture even more espers. Afterwards the Empire goes back to the sealed Esper cave, now open, and find the three statues, which are in perfect balance. Once the Empire finds the statues, the floating continent rises into the sky and the group must keep Kefka from messing with the statues.

Needless to say Kefka does mess with the statues, removing the delicate balance that they are in and the WoR is born.