At first it seems as though the world is peaceful. But we soon see that there are a lot of hidden problems, which when seen, reveals a world where war can break out at any moment. Garden was formed to create soldiers to quietly settle the disputes. They are spread out all over the world, but don't appear to work under a specific country. They instead balance out the military powers and at first seemed to create peace. Until that is the legendary witch awoke from the long silence.
When Squall attends the graduation ball he dances with Rinoa. They do not reveal their identities to each other at the dance. They do, however, meet again later during Squall's first assignment in which he discovers that she is the leader of the the Forest Owls, the rebel organisation fighting the occupying forces of the Galbadian government. Despite the assistance of SeeD, the Forest Owls are not very effective in their battles. They basically use harsh tactics to deal with the government without any consideration as to the potential repercussions of their actions (not all that different from AVALANCHE that Barret lead against Shinra in FFVII). After meeting up with Rinoa, Squall has a strange dream in which he is Laguna Loire, a Galbadian soldier who would rather be a journalist. In the dream Laguna is on a mission with Ward and Kiros.
The nation of Galbadia has since annexed neighbouring Dole after declaring war on the rest of the world. It is believed that the Galbadian president was assisted by the witch Edea. Because she is supposed to be behind the recent Galbadian actions, Squall is sent to kill her. Seifer, however, complicates matters when he appears by Edea's side. Seifer and Squall have been bitter rivals for years and Seifer was responsible for the scar on Squalls; face during a training battle that got out of hand in the beginning sequence of the game. He apparently pulled the trigger of his gunblade while it was in contact with Squall's face. This resulted in the release of a massive amount of energy which provided extra damage. This move was apparantly against the rules of the battle. Seifer is assisted by Raijin and Fuujin, his loyal bodyguards, who will try to disrupt Squall's mission as much as possible.
Edea is an enemy for Squall and SeeD. Witches are the only women who use powerful magics and have been around since ancient time, although still the reason of their existance is unknown. They are not immortal, but are said to to have a fatal thread like humans. It is also said that a witch's power can be passed on to other people of her choice. The witches power isn't determined by blood so the chosen person will suddenly get tremendous power and that persons life may be dramatically changed. Some witches use their magical power to conquer people and some lived solitary lives, living in hatred of their power. Some evil witches used their tremendous magical power to control governments. The people feared all witches as evil ones and tried to get rid of them from society. Now (time of FFVIII) the presence of witches in the world is unknown to ordinary people. For the young they have become just another legend. Many of the people had also forgotten of the existance of evil witches and when Edea appeared in public the people seemed to adore her as if she were a God.