The tribes of the Shaar, the Wizards of Halruaa, and the mercenaries of the Lapal League rallied their forces and sacked the temple twenty-two years ago in a battle called Emridy Meadows (named for the site of the largest confrontation). Most of the evil forces were destroyed or driven off. The temple itself was greatly damaged, but the underground levels were extensive and dangerous even for those heroic folk. So the Temple of Elemental Evil was sealed with a great magic, imprisoning a powerful demon within its confines.
Nine years later, bandits began to trouble the area around Hommlet. Evil humanoids and strangely garbed priests were seen on the road. Within the following year, it became clear that the Temple of Elemental Evil was rising again. This time, the folk of Hommlet and the surrounding areas coordinated and fostered attacks by bands of adventurers against the ruined but still-occupied temple. Eventually, the evil was once again overthrown, and this time the temple's dangerous lower levels were destroyed. Since then the territory has prospered in the peace that has settled in, apparently for a long stay. Common wisdom has it that no more adventures can be had in Hommlet.
Once this area was simply a gentle wilderness. Growing out of a small collection of farmhouses and a roadside shelter, Hommlet expanded quickly. Prosperity came naturally to the fertile lands, as herders, farmers, hunters, trappers, and woodcutters made the growing hamlet their home. The town was built on a crossroads between Sheirtalar and Lushpool of the Lapal League, so visitors were frequent. Eventually, these visitors brought trouble.
Brigands and other humanoids have been a bane to Hommlet for years. Eventually, thieves, cutthroats, orcs, and even more sinister forces created a settlement of their own - Nulb. That hamlet was frequented not only by the most evil of people, but also by monsters and beasts as well. A chapel dedicated to vice and damnation grew nearby, with increasingly vile creatures coming to worship foul deities there. In time, this chapel became the Temple of Elemental Evil, filled with dark priests and their wicked servants.
While that first temple reigned, the lands around Hommlet grew dark with violence and pestilence. As their power increased, the temple clerics built a small keep, known as the moathouse, not far from Hommlet. From this base they planned to launch raids and secure their fortunes in the west. Fortunately for Hommlet, those who commanded the temple were not overly concerned with the village but with more powerful strongholds to the west. When their corruption's spread, it drew the attention of armies the temple was not prepared to deal with.
Forces from the surrounding area (tribes of the Shaar, the Wizards of Halruaa, and the mercenaries of the Lapal League) attacked the temple, some using Hommlet as a base and a point for resupply and rest. When the temple fell, folk in Hommlet saw dark-robed priests fleeing eastward and rejoiced that the evil was gone.
Two men involved with the fall of the original temple, Rufus and Burne, settled in Hommlet and built a tower. Their connections to the lord of Sheirtalar to the west were well known, as were their plans to expand the tower into a large keep. The town prospered once again.
But Evil was not done with the Temple of Elemental Evil. Slowly, over the years, its creatures and servants returned to the place and brought with them the taint of evil that hung like a shadow over Hommlet a second time. This time, however, the inhabitants of Hommlet chose to get involved. A young man named Elmo and his brother Otis worked with Cannoness Y'Dey of the Church of Helm to spy on the temple's activities. They helped small bands of adventurers overcome the evil cleric Lareth the Beautiful in the moathouse and the more powerful foes in the temple - not the least of which was a demon lord who was eventually banished back to the Abyss. This time, the Orb of Golden Death collapsed the dungeons beneath the temple, and it appeared that the place was finally overcome.
In the years that followed, the town prospered as never before. With the temple and Hommlet on the lips of many throughout the countryside, the former hamlet grew into a village and eventually a small town. Burne and Rufus finished their keep and were granted the town and the lands around it to protect and nurture. More churches sprang up to serve the needs of the growing population, and some are even talking now about building a wall around the town.