Before he was a Crusader, Blaggi was a holy worker who received the teachings of Saint Maira. He was originally to be sacrificed to the Dark God, but a bishop who followed Maira saved him and raised him on an island located north of Agustra.
After Blaggi became a Crusader and the Empire was destroyed, he came back to the same island he grew up on and saw that the Maira priests were all slain by the Empire. He then decided to build the Blaggi Tower there to mourn their deaths as well as tell the world that there were people in the Imperial inner circle and the Lopto church who saved the people, at the cost of their own lives. Over time, the true purpose of the tower would be forgotten, and by the time of Genealogy of the Holy War, rumor stated that the tower was built as a place where his powers could be sealed. After this, Blaggi created the Church of Blaggi, and his religion spread and became very popular.
In Fire Emblem: Thracia 776, the Blaggi Sword is revealed. It isn't stated what Blaggi had to do with this sword, but considering that the Lopto Sword was "cursed" by the Lopto Sect, the Blaggi Sword was probably "blessed" by Blaggi.
Blaggi is a corruption of Bragi, the god of poetry in Norse mythology.