This is intended to be a kind of summarization of the writings of Michael Moorcock about the creation and nature of the Multiverse. It is by no means complete, but is rather intended to try to collate the varied and fragmented bits that he has scattered through his writings into a coherent whole.
Sources include The Quest for Tanelorn, Stormbringer, The King of Swords, and the Hawkmoon game.
The Multiverse consists of what is colloquially called "The Million Spheres". Each sphere or plane is a complete dimension in which both men and gods exist.
Interplanar travel is possible. Some races, such as the Vhadagh or Nhadragh can naturally see into and travel between the planes (or at least their "Fifteen Planes"). In some cases, artifacts are necessary to travel the dimensions. The Runestaff, for instance, allows the wielder to travel to any dimension known (cf. "The Vanishing Tower").
Every eternity, an event occurs which is called "The Conjunction of the Million Spheres". This is a time of paradox, when interplanar travel is easier than ever before or after. Old laws are broken and new ones are forged. The nature of space and time are changed. Another Cycle of Events begins. After another eternity, another Conjunction takes place, and so on.
It is in the Cycle previous to the current one that the events of Moorcock's writings take place and that this discourse is concerned with.
After the beginning of the Cycle, smiths alien to the Multiverse created four artifacts. Despite being not of this Multiverse, they served the Lords of Law and humanity. With the first artifact, they sought to fight Chaos with Chaos, much as a fire is fought by creating a back fire. The first artifact is the Two Swords (which on Elric's world were called Mournblade and Stormbringer). But in order to give them the power they needed, the Swords had to be inhabited by a spirit. They struck a bargain with a creature whom we will call the Spirit of the Sword. His power was split between the Two Swords. But one of them was broken, and so he inhabited the remaining one.
The smiths realized the flaw in their belief of using Chaos to fight Chaos. So, they created the Second Artifact, the Runestaff, an instrument of Law. Again, they bargained with a creature, whom they thought was the brother of the Spirit of the Sword. This creature is known as Jehemiah Cohnalias, son of Orland Fank.
Sadly, the smiths did not realize that Jehemiah and the Spirit of the Sword were not brothers, but different aspects of the same being. With the power of the Swords and the Runestaff, this being could wield absolute power over the entire Multiverse (with one exception).
In order to trap the being, the smiths created the Third Artifact, the Black Jewel (which manifested itself in the world of Hawkmoon as the Jewel implanted in Hawkmoon's skull). However, although it could imprison the being's soul, it could not do this for eternity.
Therefore, the smiths created the Fourth Artifact, the most powerful of them all, the Cosmic Balance. A symbol of the necessary Equilibrium between Law and Chaos, it gave power to the Runestaff to produce Order. It could resist the power of the Spirit of the Sword, and therefore became its sworn enemy.
Their task completed, the smiths returned to their place of origin. The Four Artifacts worked their power on the entire Multiverse. The Eternal Champion served the Cosmic Balance to preserve Order and Equilibrium. Though numberless, he and his Companion were doomed to constant struggle. They include: Prince Elric of Melnibone and Moonglum of Elwher; Prince Corum Jhaelen Irsei and Jhary-a-Conel; Duke Dorian Hawkmoon von Köln and Oladahn of the Bulgar Mountains; John Daker, alias Erekosë; Earl Aubec of Malador; Urlik Skarsol.
Sometimes the Incarnation of the Champion carried one of the Artifacts: Elric carried Stormbringer, the Black Sword; Hawkmoon bore first the Black Jewel, then the Runestaff. But ever the Cosmic Balance controlled the other three Artifacts, using them to fit its own purpose.
At long last, another Conjunction was about to take place. The Spirit of the Sword, seeking a way to break the Cosmic Balance and escape its eternal prison, took hostages that would persuade two Incarnations of the Champion, Hawkmoon and Erekosë.
In Tanelorn, all met. The Spirit of the Sword needed two things: to have in its possession the Black Jewel so that it could reunite itself with its counterpart in the Runestaff; and then to possess the Incarnation of the Champion who would be willing to wield the Sword for it. For the Spirit could not abide in both the Jewel and the Sword simultaneously, not if it wished to remain whole. And it had to be whole to have enough power to destroy the Balance.
In exchange for the hostages precious to him, his wife Yisselda, and his children Manfred and Yarmila, Hawkmoon surrendered the Jewel. For ironically, the Spirit could only use the Jewel for its purpose if it were surrendered to it willingly.
The Spirit then reunited itself with its counterpart in the Runestaff. Now that it had the Jewel, it sought the Sword. In that form, it could destroy the Balance. But, should it manage to do so, as it had long desired to, it itself would be destroyed unless it had a refuge -- the Jewel. Moreover, while inhabiting the Sword, a manifestation of the Eternal Champion would have to wield the Sword. And thus the second hostage.
Erekosë volunteered to take the Sword in return for the hostage, Ermizhad, his love. The Spirit then inhabited the Sword, leaving the Jewel behind. Controlling Erekosë, the Spirit destroyed the Balance.
The Spirit then inhabited the Jewel. Until Hawkmoon destroyed the Jewel with the Runestaff. Bereft of a refuge in which to survive until the next Cycle, the Spirit of the Sword, Fear, Satan, was rendered powerless. The next Cycle would have no gods.
Tanelorn alone is present in every plane in the Million Spheres. It is a concept, a city, a refuge. Tanelorn has the power to resist even the power of the Spirit of the Sword. It is a place where men do not need gods. They rely on themselves.
Tanelorn was created by Man. It has always existed, and always shall.
Moorcock left many questions unanswered in his novels. Most of them have to do with the Four Artifacts, or with items closely associated with them.
For instance, the two runeblades Mournblade and Stormbringer are obviously the Two Swords. Yet what are and from where did the "brother swords" to Mournblade and Stormbringer that Elric used to defeat Arioch and other Dukes of Hell?
What purpose did the Horn of Fate serve? Since the Lords of Law defeated the Lords of Chaos in Elric's world, then how can mankind be free of all gods?
As I have said at the beginning, this is by no means a complete or even correct summary of the Multiverse. This is simply my attempt to correlate all the bits of information that I have read. I hope that it may be of some use.