Celestia and Luna's Backstory
(I'm going to refer to Earth Ponies as Terrans, because I've always thought their race's name being “Earth Pony" was kinda dumb.)
My concept of Celestia and Luna's parents. Gaia represents the Earth (Mother Earth) and Cronus represents time (Father Time).
The majority of the time, the Alicorns kept their distance from the creatures of Earth.
When the three pony types decided to put aside their differences and come together, some Alicorns became excited at the idea that eventually they'll discover how to unlock their innate Alicorn magic and transform and join them. Gaia and Cronus were some of them.
Alicorns have an innate sense of what a ponies cutie mark will be, so they choose Celestia and Luna to be the ones to rule over the three pony tribes and guide them since their destinies to raise the sun and moon, and the Unicorns were struggling with it. They were hoping with C&L as guides, the normal ponies would be turned into Alicorns and replenish their numbers.
Gaia and Cronus had found a pupil in Starswirl years ago, so they sent C&L down to be raised by him so he could teach them magic, since Unicorns have more experimental ways of doing magic than Alicorns.
I, like some others, had always preferred the idea that an Alicorn created the Tree of Harmony, instead of it just being Starswirl and his lovers, um… friends 😏 like it is in canon. However, I do like the thematic idea that if ordinary creatures with a strong enough bond combine their magic, they can create powerful artifacts. So in my AU I decided to combine both ideas.
Gaia, whose magic manifests through nature like plants, weather, animals, etc, helped the Pillars create the Tree of Harmony by combining their magic and creating the seed herself. They also made it so that C&L could use it when they get older, explaining their cutie marks on the Tree.
(The whole bit about Starswirl entrusting Scorpan to plant/watch over the seed and some of Scorpan's magic ending up in it and all that still happened.)
After Luna turned into Nightmare Moon and was banished, Mom and Dad were devastated. However, they didn’t free her because they viewed it as a learning opportunity. Go in the corner Luna. Cronus was actually the one who created the prophecy about Nightmare Moon's return because he saw Celestia finding the new Element barriers (Mane Six) 1000 years later.
Celestia created her school after Luna's banishment. Celestia knew that without her sister, her grip on the Elements of Harmony would grow weaker and weaker, until eventually she couldn't use them. So she created her school to find a Unicorn who could wield the Element of Magic, and eventually the other five would come along.
Celestia, despite being a combination of all three pony types, has a subconscious bias towards Unicorns because she and her sister were raised by a Unicorn wizard, who emphasized magic and spellcasting. Pegasi and Terrans have magic too, but because they're more passive than Unicorn magic Celestia never considered the Element of Magic could be anything other than a Unicorn.
Celestia took many personal pupils. Radiant Hope, Cadance (who's a Pegasus, but Celestia knew she was related to Princess Amore, a Unicorn and creator of the Crystal Empire), Sunset Shimmer, Sunburst, Twilight Sparkle, probably some others in the hopes they'd be the Element of Magic and/or they could become Alicorns to help her rule. When Celestia saw that Twilight's cutie mark was the Element of Magic, she knew that she was The One.
Celestia used Spike's egg (which was given to Starswirl by Scorpan) as a prop for the entrance exam for Celestia's School for Gifted Unicorns. Failing to hatch the egg had no bearing on whether or not they got in, it's just to see their power level. If hatching a dragon egg did matter/if there were more dragon eggs other than Spike, we would've seen a lot more dragons running around Canterlot (which actually would explain the dragonsneeze trees, but whatever). Starswirl created one of his most powerful spells, the amniomorphic spell, for the specific purpose of hatching this egg, but he never got around to it.
After the events of the season 8 finale when magic almost disappeared from Equestria, Gaia and Cronus were really pissed that C&L almost let that happen. A little donkey (Bray, Grogar's sidekick and stand-in for Cozy Glow), of all creatures, almost caused the apocalypse! So they contacted their daughters for the first time in around 1000 to invite them back to Skyros, believing they failed to properly rule. This is why C&L asked Twilight and her friends to replace them.
