This topic was covered in the 1992 Ravenloft accessory "Forbidden Lore". Basically the domain is a floating domain of the Athasian city of Kalidnay that was pulled into the mists when a dragon-advancement ceremony of unspeakable evil attracted the Dark Powers. The casting of the 10th level psionic enhancement went awry, the dragon-queen Kalid-Ma was placed in a coma, and the domain leader was her lead templar, a rather evil guy who was (I believe) in love with Kalid-Ma. The dragon-queen was somehow stuck in a "defiling-on" position, slowly defiling in an ever growing radius from her comatose body. To keep what little arable land was left to them, the inhabitants of Kalidnay would capture visitors who came from out of the mists and have them fight to the death in the gladiator arena near Kalid-Ma's comatose form to abate the dragon-queen's defiling effect.
The supplement went on to discuss psionics and defiling in Ravenloft, what Dark Sun characters would encounter in other domains (abundance of water, metal), etc. A good read and still very memorable.
Ruins of the city still exist on Athas, which led to speculation that the Dark Powers had only duplicated Kalidnay + environs when creating the domain.