The Precursors were the first sentient species. They didn't call themselves Precursors naturally. They called themselves Arnor. They didn't evolve. They were made. Religion and myth have clouded the specifics of the very beginning. What we have learned (i.e. according to Precursor artifacts that have been found and translated) is that there were once 5 "guardians of the universe" who were sent to ensure that life would come to exist in the universe when the proper time came. Where they came is unknown. But what is known to the Precursors is that the object the Guardians were to take care of was known as the Telenanth. It was a crystal of some kind (as best we can tell) that when unleashed into the universe would allow inorganic matter to become organic. The line between the two is apparently a lot thinner than previously believed (or more exactly, what the Mithrilar consider living is probably a lot looser than what we today would consider living). The Mithrilar would probably even consider proteins to be life as apparently they did not exist prior to the unleashing of the Telenanth.

According to what we have learned of the Precursors, the Mithrilar used the Telenanth to actually change the laws of physics as we know them in the universe in such a way to allow for certain types of molecular bonds to be able to form. We cannot see how this is possible as the laws of physics are absolute and any change to them would make the universe as we know it impossible.  But the Precursors certainly believe that the laws of physics are fluid.

Meanwhile, one of the Mithrilar was different from the others. Known as the "Dark Mithrilar" he/it became known as Draginol. Where he originated is unknown even to the Precursors. What is known is that Draginol created the Precursors in his own image. The Arnor, in their natural form, resemble Altarians (and humans) -- this was the Altarian prophecy that came to be seen to be true once actual contact with the Dread Lords occurred.   We do not know why Draginol's natural form resembles an Altarian/human. We do know that the other Mithrilar had no specific natural form at all.

The Arnor quickly built a great civilization that eventually spanned the stars across the known universe.  The universe was empty with no life on it other than the Arnor and other specific forms of life created by Draginol for their planet. In time, the Telenanth was unleashed and nearly all of the guardians of the universe were no more. With the Mithrilar gone, the Precursors began to observe the rise of new sentient beings evolving across the galaxies.

In our galaxy, the first civilization to become sentient was known as the Iconians. The Arnor became concerned of what the future might hold in a universe teeming with these younger sentient races.  One faction wanted to exterminate alien sentient life upon discovery. The other wanted to guide them. In time, this difference in philosophy grew into a civil war. The losing side became villainized and known as the "Dread Lords". The war was long and devastated the galaxies in which it was fought. The Arnor were on the brink of defeat but had constructed a trap to remove the Dread Lords from our dimension and place them in a pocket dimension. With that accomplished, the Precursors disappeared until the Drengin unwittingly released the Dread Lords from the pocket universe.  The location of the Arnor home world is still unknown and the Arnor disappeared from the known universe soon after the Dread Lords were banished.

Some other notes about the universe according to the Precursors:

According to what we have learned, as big as the universe is, nearly all of the galaxies are lifeless and that in time, even our galaxy will become lifeless until the end when everything breaks back down to sub-atomic particles again, the price of having a universe capable of the molecular bonds provided by the Telenanth.  The Mithrilar also considered all matter other than what we call hydrogen and helium to be miraculous and that all elements other than those two were created due to the Telenanth's initial effect on the singularity force of the universe.