Phineas comes from a world where magic is a crime. Long ago, the Government decided that those born with the ability to use magic were too dangerous to be left to their own devices, and so they outlawed it's use and started a special agency to hunt down those mages who resisted them. The agency was made up of magicians loyal to the government, and they used a series of magcial scrying devices to identify potential mages before they were born. They began kidnapping the children who would one day be mages, raising them in secret labs and subjecting them to mind control and torture. The idea was to raise an army of magicians, completely loyal to the government.
Phineas was a child of thirteen when the new laws were put in place, the son of the world's most powerful mage, one Beatrice Reinhardt. She escaped the agency's men with the young Phineas, becoming a fugitive. Instead of simply hiding, she decided to strike back at the corruption, leading a resistance to defeat the agency. Enter the villain, Jeremias Golding.
The leader of the agency of mage killers, Jeremias was no slouch himself when it came to magic. In his opinion, loyalty to the Government was greater than any personal sense of morality or injustice, and he worked brutally to ensure that the government's will was carried out. He purged the resisting mages, using black secrets taught to him by the demons themselves. Beatrice sought him out and dueled him, determined to escape the fate chosen for her and her son. She was destroyed, only blackened ash remaining.
The rest of the mages went into hiding, skulking in the shadows. Some left the country, heading to places where they could live in peace. Phineas went north, disappearing into the woods in the dead of winter. No human could survive the weather for long, and he was thought dead by those who knew him. He was sixteen at the time.
Ten years later, he came back from the woods, walking barefoot through the snow. He refused to speak about what had happened there, only saying that he had found truth in the cold and the forests. The city he returned to was blighted, slowly dying under the evil that controlled it. But if Phineas brought nothing else from the forest, he brought back hope.
He traveled the land, seeking out those few magicians that remained. He spoke to the common people, those not blessed by the art, for they were suffering under the government as well. He spoke of revolution, of rising up and destroying the oppressors. But the ten years he had been gone had crushed the people's spirit, and they did not think it possible to win this war. Phineas wandered for several years, trying to ignite the flare of revolution. At last, despairing of convincing the people, he decided there was nothing to do but fight the Agency himself. He went right into the capital city, sending out a beacon of magic to draw them to him. And when they came, he destroyed them. He battled for two days, hunting the Agency through the city. At last he emerged, wounded and broken, with his enemies dead all around him. Only one had escaped his wrath. Jeremias Golding.
Little is known of what happened between the two. There was a battle, that was certain. The skies themselves turned black, and a burning wind tore through the darkened city. When all had ended, those who came forward to see the outcome found whole buildings destroyed, blackened craters filled with rubble. Fires burned everywhere, and the very stone smoldered. Of the two combatants, there was no trace.
What really happened is this. The two fought, burning all their power in a struggles like none seen before on that world. The struggling forces of magic tore a hole in the very fabric of the universe, sending the two hurtling through space and time. Somehow, Phineas ended up in the Nexus, outside Trog's Inn. He is under the impression that he died, and the Nexus is the afterlife, although he is still trying to align it with his own idea of life after death. It really doesn't seem like the afterlife he expected.
A side effect of the duel was to nearly consume all of Phineas's magic. Although it will build up over time, for now has but a fraction of the power he once did.