1. Ilaria is divided between Men, Elves, and Dwarves. Dwarves would probably fight for glory, greed, or to keep their territory, or maybe in retaliation (they could be in a civil war beneath Dragon-Pike Mountains); they're not actively trying to expand their kingdom into the human lands. Elves are probably fighting to keep humans out of their southern forests, some more radical groups may be fighting to take back their land from long ago, while others may be in it for retaliation. The Humans are fighting over land, glory, retaliation, ideals, etc - all sorts of things. But it's not just them; a Religious group may be fighting another religious group, some Knights may be fighting some Mages, some mercenaries may be exploiting the war and taking land, an adventurers guild may be trying to help the commonfolk, a thieves guild may be trying to mend some things, etc. Ben Kalzar is trying to stop this war... but why now? That's a question you should ask; what exactly caused Ben to call a truce?

Yes, you're involved with one of the factions. Not necessarily a leader or a high-ranking member, but you're involved. And yes, feel free to completely detail your group (whether a kingdom, tribe, guild, or group).

The Peace conference is indeed the prologue where you discuss the treaty, or are suppose to.

The factions will have 'peace' but it leads to another war. Your character will not die in the prologue, they will play a major role in the coming conflict.

I intend for a lot of character interaction, yes. You guys have been at war with one another for a few years and now you're about to work together - but you gotta work together or you will fall.