Reflected worlds are an in-lore system similar to instances, enabling players to do single-player style stories, without interference from unwanted players, which otherwise would ruin the experience. Simply view them as a multi-verse.
Although they are similar to instances, a Reflected World or RW, is literally a reflected world. Everything short of the landscape is able to differ from world to world, although they are generally closely identical. Each new quest or mission a player obtains will give that player a new RW that only they and their party may enter. The RW's were created through the shattering of the Crystal of Creation, although the RW with the Citadel of Sorcery present is the only one that players will continually revisit, and is the only one to host community driven gameplay, giving it the title "community reflected world" (CRW) as opposed to a "story reflected world" (SRW).
The original world was created by The Dead Gods within The Crystal of Creation. The crystal of creation was shattered by a human named Peran Tremora, after his family was killed by demons, hoping it would kill all the demons still within. Instead of destroying the crystal, it shattered into innumerable geometrical copies of the original. Everything except peran and the demons was reflected, as they were not created within the crystal. Only 1 RW retained the demons and portal to the darkhalls, were the crystal was hosted, which is also were the Enchantress chose to build the Citadel of Sorcery as a bastion of defence.