In Futaquestria thousands of years ago there were several small kingdoms of creatures called Humans. One kingdom had attacked several towns of Ponies and caused many ponies to die. This lead to a war between Ponies and Humans, a war that Ponies won.
As punishment for their actions a majority of Humans became slaves to the Ponies. Some Humans however were spared this punishment since they helped Ponies, their descendants were also spared the punishment of servitude. These Humans were given some of the land of one of the kingdoms to rule over.
Their small kingdom was still part of Equestria and the rest of the land of the human kingdoms were taken by ponies. The small human kingdom remains loyal to Equestria and are a protected by Equestria. The human servants do have the ability to be pardoned of their servitude if they do a great feat to help Equestria.

There are more characters then what the character thing says. This is because there wasn't an option for most characters.