"My full name is Eileen Belserion. The former Queen of the Dragons."
-- Eileen telling Erza her full name.
Eileen is originally from 400 years in the past, or before the events of the beginning of the manga. During this time, dragons roamed the land and even lived with humans, helping them to advance their civilizations and grow as a whole. The kingdom of Dragnov was a prime example of this, as Queen Eileen had built up many strong relationships with friendly dragons to the point where she allowed them to play with her kingdom's children. According to her, many countries existed in Ishgar that employed this structure as well, and her own kingdom had seen dragons walk alongside and live with dragons for generations. She was especially close to one dragon in particular named Belserion, who she would later take as a last name after he perished.
Dragon King Festival
One day, Belserion informed Eileen that dragons to the west of Ishgar had been attacking and eating humans. She displayed great discomfort over this idea and agreed with Belserion that the ideology of dragons fighting humans should not take root in Ishgar or her kingdom, because she feared that the actions of a few dragons would break down the trust built between humans and dragons and tarnish everything between the two species. Belserion promised her, however, that he wouldn't let that come to pass, and it was because of Belserion and other like-minded dragons that saw the start and culmination of the "Dragon King Festival", a war between humans and dragons.
Eileen agreed to help in the war with her Enchantment Magic, the ability to grant certain attributes to objects to change their appearance, make them stronger, reinforce a certain attribute, and so forth. Many of her subjects believed that her magic would play a major role in the upcoming war because she could just grant stronger physical attributes onto ally dragons to make them faster, stronger, and overall more deadly. Although she had agreed to participate in the war effort, the thought of dragons fighting and killing each other still didn't sit well with Eileen, and matters were only going to go from bad to worse. Despite Eileen's magic, the sheer numbers of enemy dragons were too much for ally dragons to handle, and things only became worse when dragons native to Ishgar who were already opposed to coexisting with humans joined with the "evil" dragons and only added to their numbers.
Over time, the evil dragons' numbers began to wear down and overwhelm their enemies. Despite their conviction to protect humans at all costs, dragons such as Belserion saw the inevitable outcome: they were going to lose the war. Eileen begged her friend to let her fight, knowing full well the power of even a hundred humans couldn't compare to a dragon. her solution was a simple one: have Belserion bestow dragon powers onto her. With the power of the dragons themselves, Eileen believed the added numbers of humans who would then be able to fight would tip the scales in their favor. Belserion originally thought this tactic impossible, but it ended up being successful, and thus Dragon Slayer magic was born with Eileen being the unofficial "mother" of all Dragon Slayers. With a number of humans now imbued with the power of the dragons themselves, the evil dragons began to lose their numbers advantage and were being pushed back. Eileen's tactic had worked and the war was beginning to look winnable.
There were drawbacks to gaining this power, however, and it soon began to manifest itself in the humans it was granted to. Some of them couldn't handle that level of power and were driven to madness and rampages. Some were stricken with illness due to being overwhelmed by the strength of a dragon's senses and the gap between their own human senses. The worst factor of all, however, was the Dragon Seed. The Dragon Seed began to sprout in the Dragon Slayers and would eventually cause them to irreversibly transform into full-fledged dragons in a process called "dragonification". This began to manifest itself in Eileen at the worst time, as she had become pregnant with Erza Scarlet at the time.
One Dragon Slayer in particular, however, embraced the dragonification process wholeheartedly and used his newfound powers to basically end the war himself. This Dragon Slayer, named Acnologia, saw fit to become stronger by killing dragons on both sides of the war, and thus the number of dragons in the land wee brought down drastically and the Dragon King Festival ended with no clear winner. It was also during this time that Belserion fell in battle, despite Eileen and her husband attempting to treat him of his wounds.
Fall from Grace
Even though the war had ended, Eileen's dragonification kept growing. Soon, half of her face had become scaly despite her best efforts, yet she stuck to the claim that she was still herself, still loved dragons and humans, and wasn't going to change. Her husband, however, only saw her as the monster she could become and feared another Acnologia would be unleashed on the world. Despite Eileen being pregnant with his child, he sentenced her to the dungeon and would only see her as a monster from then on.
Her life after that became a living hell, as not only was she continuing to transform into a dragon, but she was treated as badly as she could be by her husband and his servants. She was tortured with whips while being tied up and bound, she was beaten by groups of servants, and she was even publicly shamed by being tied to a cross and displayed for the kingdom to see. Her love for her child never wavered, however, and despite everything she had been through she was able to protect her womb from any serious or threatening harm. She was even able to cast her Enchantment magic on the baby to prevent if from being born for three years, stating she didn't want to give birth in the grime and filth of her dungeon cell. When her husband came to her cell and informed her that the day of her execution had arrived, she attempted once more to plead with him to spare their child, not caring what would happen to her as long as their unborn baby was spared. Enraged at the thought of having a monster baby and sick of hearing about her baby, Eileen's husband attacked her and threatened to cut her stomach open to prove she wasn't carrying a child. Something finally snapped in Eileen when her baby was threatened as such, and the Dragon Seed fully blossomed. Now a dragon in full, Eileen killed her husband in a fit of rage, blew up her dungeon and surrounding buildings, and fled to the mountains.
Although she loved and cared deeply for dragons, Eileen was devastated to have lost her humanity. She constantly rejected her dragon body and wanted nothing more than to return to her human self. Appalled at the thought of giving birth to her child as a dragon, Eileen spent the next few hundreds of years living by herself far in the mountains, searching endlessly for a way to reverse what had been done to her. Things began to look hopeless, as despite all of her experience and skill in magic, Eileen was unable to figure out a way to become a human again. It was during this time that she met a wandering Zeref and through his exceptional skill in magic, he was able to turn her visage back into that of a human. Eileen was elated, and even though Zeref told her she wasn't completely a human again but rather only granted the "looks" of one, she didn't care because she believed her curse was lifted.
As time passed, she found that no matter how much she ate, she could no longer taste any of it. No matter how hard she tried, she couldn't sleep. Sensations like itches, coldness, or slight pains began to nag at her and she couldn't get rid of them. Driven to madness, she realized that the child she was still carrying was still human and devised a plan that she would never had thought of before. She wanted to Enchant herself onto her baby so that she could once again have a normal, human body. Releasing the magic she had been placing on her baby, Eileen gave birth to Erza and attempted to become "one" with her to return her life back to normal. Unfortunately for her, this process failed. Eileen then gave up hope of returning to being a human and fed up that her baby couldn't help her, she abandoned Erza in Rosemary Village. She then went across to Alakitasia and joined with the Alvarez Empire, led by Zeref, where she remained until the current events of the story.
War on Ishgar
"Excluding Eileen, there is no Mage in existence who can stand up to August. In Alvarez, while August is referred to as the "Calamity", Eileen bears the title of "Despair". The two of them are peerless in skill."
-- Brandish speaking of Eileen's power and skill.