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Arcadia is a village found in the Nabata Desert where dragons and humans lived together in peace and harmony. The town was discovered by Archsage Athos and Nergal hundreds of years before their bitter enmity began. They studied there together and Nergal used the knowledge he gained from the dragons in order to harvest quintessence and to call forth Nils and Ninian through the dragons gate shortly before the events of Fire Emblem: Rekka no Ken. While the dragon inhabitants are simply referred to as "dragons", Binding Blade's backstory seems to indicate that most, if not all, of them are Divine Dragons or their descendants. In the Japanese version of Rekka no Ken, Nergal also claims that Athos conspired with the Divine Dragons to defeat him.
Arcadia is a region of Greece on the Peloponnese. During the golden age of Ancient Greek civilization it was a remote pastoral unknown, as the mountainous terrain isolated it. However, it is linked to several myths; supposedly the Greek gods Hermes and Pan were born here, as was the famous runner and huntress Atalanta. Evander, one of the legendary founders of Rome, was said to be an arcadian.
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