The Quarantine was instituted as the Aetgardian Plague began spreading throughout the Aetgard region of western Arad. As the plague was spreading extremely quickly with no known cure, the eastern nations worried that the disease would soon spread across the entire continent and so all contact with the western mainland nations was forbidden. Refugees continued to flee the plague-stricken lands, however. In an unprecedented act of cooperation between the nations of Khaldea and Nuum, it was proposed that barriers be constructed to keep plague-carrying creatures from spreading the disease further east. A massive wall was constructed in southwest Khaldea, cutting off Karnath from the east. Workers also entered the mountain pass on the west border of Khaldea with the intent to build a second wall there, but were saved the trouble when, to their surprise, they discovered a massive glacier blocking the western portion of the pass.
Now with the Plague having run its course and the old land of Aetgard left in ruin, the Quarantine remains in effect. In addition to fear of potential carriers, now immune, bringing the plague east with them to infect those who never built up resistances to it, the Quarantine is also enforced in an attempt to contain the resen, canim, and nether outbreaks that have occurred in what is now termed the Lost Lands.
However, import and export trade has partially resumed in western mainland Arad. Trade occurs, but with some very thorough inspections and other tedious processes required. While goods can get out of the Quarantine, people still cannot, barring a very select few with the proper authority, paperwork, and so on.
Grayish areas are port cities, where outside traders can come ashore to take care of business, but are limited to the dock districts, and access to the dock districts is restricted to specific authorized people who work as go-betweens between the visitors and the locals. Such people are regularly inspected, and thoroughly.
All that said, there is sure to be the odd illegal operation here and there. The quarantine is not perfect - it is impossible to flawlessly guard the western coastline of an entire continent. To help with this, all parties have been given free reign to reinforce the quarantine in the waters of western Arad, with no consequence for attacking ships that cannot be identified as having permission to pass through the quarantine borders. As a result, sailing in Quarantine waters can be very dangerous, the region being a favorite of raiders and opportunists from Sirak Drauth and Tyr-Gwyrd especially.
Being exiled to lands within the Quarantine, particularly the Lost Lands, is a common sentence for offenders from outside nations when said offenders aren't quite bad enough to be straight up executed, or in instances where execution is deemed unethical or otherwise inappropriate. This practice of "merciful exile" is particularly common in Ivial.