Sasune-Saronia War
As per a Famicom-era strategy guide: Magic in FF3's world is polarized due to an ancient war between Sasune and Saronia.
Here is the passage describing it, courtesy of the guide (via Google translate):
The origins of black magic were religious. It started out as a ritual to pray for rain, and was later used to treat illnesses, and there was no classification of black or white.
The reason magic became polarized in its history is due to the wars that broke out between two great powers.
King Sasune focused on magic as a means of attack, and placed the mages in his country under his control, creating a method of killing. This was the beginning of black magic. However, some mages thought that magic should not be used as a tool for killing, so they escaped from Sasune and moved to Saronia, where they established a new system of magic. This was the beginning of white magic. Eventually, as black magic developed, the war situation turned in Sasune's favor, and many Saronia soldiers were injured and killed by black magic. The King of Saronia, who took the situation seriously, asked the white mages for help. This was the first time that white mages entered the vortex of war under the pretext of protecting people from black magic.
However, this backfired, and the power of each side's magic escalated one after another. Finally, the white side perfected the ultimate slaughter magic, Holy, and the black side perfected Flare. However, at that time, no one realized the true horror of this magic. Then tragedy struck. The moment the enormous energy of their ultimate magic collided, tens of thousands of soldiers on both sides were instantly wiped out. This battle marked the end of the war. And with the end of the war, the enormous magical power was sealed away in the forbidden land of Eureka.
