Annual Wars were a series of yearly border skirmishes between the Re-Estize Kingdom and the Baharuth Empire designed by the Empire to slowly weaken the Kingdom in preparation for a full-scale invasion. Until the Sorcerer Kingdom joined the conflict on the side of the Empire, turning the conflict into an all-out war.
After ascending the throne of the Baharuth Empire, Emperor Jircniv's main goal was to create a great empire that would survive the test of time. To this end, he set out to conquer the neighboring Re-Estize Kingdom.
However, rather than declare all-out war on the Kingdom, the Empire instead chose to engage them in small territorial skirmishes at the Katze Plains every year. These skirmishes mostly followed the same pattern: The Imperial Army would engage the Royal Army, there would to a short scuffle and then the Imperial Army would retreat. Because of this, the Kingdom's nobles viewed the Annual Wars nothing more than a "parade." However, the Empire's true aim with these skirmishes was to slowly weaken the Kingdom while waiting for an opportunity to conquer them with minimal losses. While the Empire used career soldiers, the Kingdom relied on draftees. Thus, by invading during harvest seasons, farmers would be separated from their fields, causing crop failures that would eventually result in famine. By the time the Kingdom realized this, it would already fall into decline.
Following the Workers Invasion, Emperor Jircniv was forced to travel to Nazarick and apologize to its ruler, Ainz Ooal Gown. Upon arriving, he was horrified to learn to Ainz was an undead and that the tomb was inhabited by all kinds of monsters. Hoping to avoid war, the Emperor proposed an alliance to aid Nazarick claim the city of E-Rantel, which Ainz accepted. Afterwards, the Emperor realized that Ainz had caused the workers Invasion to arrange this meeting. Knowing the Empire couldn't defeat Nazarick alone, the Emperor began making plans to form an alliance with the surrounding nations against Nazarick. To show the other nations of the danger Ainz posed as well as keep his promise to Ainz and get an estimate on the extent of his power, the Emperor intended to have him fight and unveil his power during the Annual War.
While the Emperor believed Ainz was a mastermind, it was actually Demiurge's plan to declare Nazarick's existence to the world as an independent nation; Ainz was merely following along with his idea. However, Ainz had not been informed that the goal was to declare war on the Empire, causing him to agree to the Emperor's alliance. While the Floor Guardians were initially confused as to their master's intentions, Demiurge assumed he was using the Empire to gain legitimacy and quickly convinced his fellow Guardians of the advantages of this.
A short while later, an envoy was sent to the Kingdom, demanding they cede E-Rantel to the newly founded Sorcerer Kingdom. However, the Kingdom dismissed it as a mere Casus Belli and proceeded to declare war on both the Sorcerer Kingdom and the Empire. After the Demonic Disturbance, the Kingdom was now determined to strike a decisive blow against the Empire and send an army of 245,000 strong to the Katze Plains while Crown Prince Barbro led a smaller force of 5,000 strong to Carne Village to gather information on Ainz.
Angered by the meager task entrusted to him, Crown Prince Barbro hatched a plot to use inhabitants of Carne Village as hostages against Ainz. However, upon arriving, said villagers did not know who to trust and the Prince eventually resorted to threats after losing his patience, causing the villagers to side with Ainz and rebel.
While the Prince's forces initially had the advantage, a turning point came when Carne Village's Chief, Enri Emmot, used her Horn of the Goblin General to summon a huge Goblin Army. This army then easily repelled the Crown Prince's force and forced them to retreat. Afterwards, Ainz had Lupusregina Beta finish off the survivors who escaped the battle.
The Kingdom's battle against Empire and Sorcerer Kingdom was over before it even began, as Marquis Raeven immediately ordered the Royal Army to retreat upon witnessing the Sorcerer Kingdom's overwhelming forces. However, it was already too late to take immediate action, as the Sorcerer King Ainz Ooal Gown used a super-tier spell to wipe out the Royal Army's right flank and summon Five Dark Young before they get to do anything.
What followed afterwards was an absolute massacre, as the Dark Young wiped out what remained of the Royal Army while they ran for their lives. The carnage was so great that, despite being allies, even the Imperial Army ran in fear.
The Kingdom's Warrior Captain, Gazef Stronoff, attempted a last-ditch counter-attack by challenging Ainz Ooal Gown to single combat. However, the Warrior Captain ultimately lost the duel. The Sorcerer King then ordered the Dark Young to stop and left the battlefield after demanding the Kingdom surrender.
Supposedly, the Annual Wars came to a final end with a clear victory towards the Sorcerer Kingdom and Baharuth Empire. Devastating the Royal Army and its soldiers' morale, the Kingdom was forced to secede the city of E-Rantel and its surrounding lands to the Sorcerer King. The fortress city created the foundations of the nascent city-state of the Sorcerer Kingdom.