I've read the Compendium translation by Capowski, and pretty much everything else that to my knowledge exists on Phantasy Star III, but it is all still quite fuzzy on what exactly the "Devastation War" exactly was. Based on the fuzzy information and timeline, it might or might not be an ethnic or race war, or war of literal good versus evil.
To my knowledge, per the combined English and Japanese PSIII, PS II Generations, the PS Compendium, etc., script and updates:
AW 1284
Phantasy Star II occurs.
Orakio and Laya were alive on Palma in AW 1284, and part of some sort of resistance to Mother Brain and/or Dark Falz. They fight Dark Falz; They lose.
Palma blows up via Gaira crashing into it, 400 ships like Alisa III and Neo Palm leave in the nick of time.
Rolf and co. destroy Dark Falz, Mother Brain, and Earthmen.
The Great Collapse occurs on Mota and Dezo; Algol loses 90% of its life and technology.
AW 2284
Devastation War occurs.
Orakio and Laya lead a Robot contingent and a (Bio)Monster Contingent, respectively.
Somehow along the way, they end up on opposing sides.
Per the English translation of Miun, the last thing she recalls of Laya riding off with a knight who has a black sword. (Implied to be Orakio's Sword, thus Orakio.)
Also, Rulakir states his heart went black 1000 years ago when his family died, which implies a wife/child and twin brother of Orakio.
Chaz and co. travel to the Abyss and defeat/seal The Profound Darkness.
AW 32xx--> 3284--> 32xx/329x
Phantasy Star III occurs.
Only 2 of the 400 ships remain or are accounted for.
Kein/Rhys is born, gives way to 2 more generations, which defeat Dark Falz.
And may or may not destroy another domed ship like Alisa III and Neo Palm.
And may or may not bring Dark Falz to Earth of the Sol System, creating a "catch 22" between PS1 and PS3.
Is the "Devastation War" an actual war or event?
Or is the "Devastation War" a blanket term like "The Great Collapse?" Which wasnt a single event, but rather a series of events which result from the loss of the planet Palma, the seal Palma transfixed, and the "care" Mother Brain no longer was able to provide as a result of being shut down?