"Once upon a time..." Those were the words that started out the stories of all the Fables. They lived for centuries until a being known as The Adversary came and forced them to flee through dimensional gates into the Mundane, or human, world. Most of the Fables lost their fortunes when they left their estates behind and so live as normal day to day people rather then Royalty. Most Fables are seemingly immortal, living forever. Their ability to survive seems to be based on the collective consciousness of the Mundane human population that grew up reading their stories. The more popular and well known the "character" is, the more likely they are to survive fatal injury. Snow White, for example, was shot though the head by a high powered sniper rifle and was able to make a full recovery whereas Weyland Smith and the members of the Mouse Police killed in battle with the Adversary's wooden soldiers remained dead. However, Frau Totenkinder has doubts about this theory.
Fable Town is a part of New York City located around the cross streets Bullfinch and Kipling. There are several shops, such as the Eggman Restaurant and Nodd's Books with Fables residing in apartments above. Spells of protection and deception keeps Mundane humans from even parking on the streets there. Many of the more well-known Fables reside in the Woodland Luxury Apartments which also houses the Fable Town City Hall. City Hall is a magically enchanted space which is vastly greater inside then it's small office door makes it appear on the outside. There are endless rooms, the Witching Well, a vast library, and all the enchanted weapons and artifacts, such as Excalibur and the Vorpal Blade, are stored there.
Keeping the nature of the Fables secret from the Mundane human world is the one of the highest laws of the Fable community. Therefore, when the city of New York started to encroach on Fable Town in the 17th century the non-human Fables were banished to The Farm, a huge tract of land in upstate New York protected from prying "Mundy" eyes by many spells to hide it's true nature. Though they understand why it was done, this move is still much resented among the non-human Fable community. Weyland Smith used to be the one in charge at the Farm until the Three Little Pigs, started a revolution with Goldilocks against the human looking Fables. The revolution failed and Rose Red is now in charge.
King Cole was the mayor of Fabletown for hundreds of years. Even though he was in the position of power, it was really the deputy mayor, Snow White that actually ran things and made the decisions while Bigby Wolf provided services as Sheriff and, unbeknownst to Snow, spy-master. Snow White' ex-husband Prince Charming challenged King Cole in an election and won. His cabinet includes Beauty as Deputy Mayor and her husband the Beast as Sheriff and spy-master. They got off to a very rocky start, but they have adapted and done rather well.
Though he ignored them for hundreds of years, The Adversary turned his attention to them. His first attempt to take all the magical items stored in City Hall from them by force failed. In retaliation Prince Charming sent in first Boy Blue to reconnoiter the Homelands and find the Adversary. Then Bigby Wolf was sent to destroy the Adversary's means of making wooden soldiers and deliver the message that "Every time you hurt us, we're going to damage you much worse in return. This will always happen. Always." Enraged, the Adversary turned his full attention towards Fabletown and began formulating plans to take the entire human world by force.
The Fables were well-prepared however and after years of preparation and various missions (some more secret and vital then others), Fabletown managed to defeat The Adversary (revealed to be Geppetto) and topple The Empire. As a final show of defeating him, they have The Adversary sign the Fabletown amnesty agreement and he is forgiven of his previous crimes and becomes a (reluctant) member of the group.
Defeating the villain that caused them to flee the Homelands and found Fabletown in the first place ironically proves to be the end of Fabletown as not long after, Mister Dark is freed (not by any resident of Fabletown) and he seeks vengeance on Boy Blue for using his sword and ends up destroying and overtaking Fabletown singlehandedly. This causes the Fables to flee to The Farm to seek refuge although even that isn't enough and they find themselves becoming more nomadic in trying to find a true new home.