There is no direct indications, however, it seems that Fernfang lore is related to Nightmare Knights1 and Dark Cathedral 2 .
If you look at the Isle itself, you will find the lava and volcanic residues (South-east part of the isle). From Lorbas3 (Npc from Dark Cathedral) we learn that destruction of Dark Cathedral was due to Volcanic activity (confirmed by NPC Angelina4 also) Now, it might mean that possibly the Isle was part of mainland and was split due to volcanic eruption. He might be "recovering" isle after work of demons ( it is said the volcanic eruption was a work of demons). We know for sure that Isle of Mist was a residue/meeting point for druids (you can find evidence in the book The Plains of Havoc5, ), therefore, it might suggest that Fernfang is trying to reclaim the Island.
There are several places and items which suggests high activity of Druids/Clerics on PoH in the past. Examples are: Holy Tible can be found there6, as also the buildings like Abandoned Monastery 7 as also the temple8 which was built there in the Past, confirmed by Oldrak9 .
Now, maybe it is only me, but the whole Nightmare Knights concept looks like based on historical Inquisition (perhaps that's why he is so keen to cleanse this place;-)
Lorbas: Some say it was just the unstable ground or volcanic activity, some even claim it was the work of demons, but we know it was the will of the gods to punish our vanity.
Angelina: The cathedral was meant to be a centre of piety and believe. A prayer to the gods that had become solid. ...
Angelina: The construction works started at the height of the order of the Nightmare Knights, right after they had won a major battle near the place where the cathedral was to be built. ...
Angelina: The cathedral was meant to become a monument of the victory of good over evil. ...
Angelina: Sadly it was just not meant to be. ...
Angelina: As the cathedral was nearly finished, most of the monks had already moved in and even a small town for all the workers and suppliers had established itself. ...
Angelina: But then the structure was struck by an earthquake and the work of two generations was destroyed. ...
Angelina: Later the dwarven constructors explained that this was caused by volcanic activities and a massive cave-in. ...
Angelina: Since the gods did not interfere and the setting was close to the notorious Pits of Inferno, it was assumed that this was the work of secret demonic powers.