Nowhere did it stand out more than in Mage: The Ascension. When the games began, the mystically oriented Traditions were the good guys fighting a war of ideology against the all-powerful Technocracy, who tried to "smooth out" the bumps in reality through extermination of all supernatural creatures. As the game went through multiple revisions, however, the flaws and in-fighting of the Traditions began to come to the fore, and it became possible for the player characters to be a group of young, idealistic Technocrats trying to reform a corrupt monolith from the inside.
The later sourcebooks (and the old stuff if you look hard enough) make it more and more easy to believe that the Technocracy, even with its flaws, really is doing the right thing by trying to save humanity from all the supernatural things that want to eat them, enslave them, or remake the world in their own image. A world ruled by the Technocracy might be bleak, but imagine a world dominated by the philosophical paradigm of, say, The Order of Hermes, or the Verbena...
To put a point on it: Depending on who you ask, the Technocracy is a genocidal Thought Police bent on creating a stagnant world they have absolute control over, a bunch of Well-Intentioned Extremists for whom Utopia Justifies the Means, or Designated Villains who are absolutely justified in their belief that supernatural influence over the Human Race is a quantifiable bad thing. By the same token, the Council of Nine either represents the last best hope for creativity, nobility and the realization of personal potential, or are a bunch of selfish children who refuse to acknowledge the true implication of their abilities against the Greater Good. It's all heavily dependent on where on the Sliding Scale of Idealism Versus Cynicism the World of Darkness lies. Unfortunately for the Traditions, this is the World of Darkness.
The central idea of Demon: The Fallen is the alternate interpretation that Lucifer rebelled in order to save humanity from being condemned to ignorance by an uncaring God. But even that interpretation is subject to a decent amount of doubt. Was it for love? Or was Lucifer simply ambitious? Or did he do it because God told him to?
And there's the ever continuing problem of getting the players to not just be Always Chaotic Evil since they are called demons. Some go for Blood Knight types, some go for manipulative Al-Pachino-From-Devils-Advocate types, and almost all of them miss the point of the game. The expanded power sets (Lore of Violation anyone?) doesn't really help with this.
Solars: Are they returning divinely empowered rulers who will lead Creation into a new golden age, or are they destined to fall into the same madness as before and make things even worse?
Dragon-Bloods: Pitiful, tyrannical usurpers or noble "little guys" who did what had to be done and kept the world from falling to pieces?
Sidereals: Stuck-up bureaucrats who couldn't see beyond their own noses and almost doomed Creation as a result, or secret agents who keep reality intact?
Abyssals: Death-obsessed omnicidal maniacs, or... eh, there's not much room for an alternate interpretation here.
... Or the tragically corrupted and repentant shells of people that might once have been heroes.
Everyone always ignores the Lunars. Most of the world sees them as raving, flea-bitten beastmen who squander their lives fighting each other over territory, mates, and bragging rights, when they aren't attempting to burn and destroy civilization to usher in total chaos. This is actually a deliberate ruse to appear less of a threat, so that the Dragonblooded and Sidereals don't try seriously hunting them down like they did the Solars. While many Lunars might fit the stereotypes if you squint real hard (and some even if you don't), for the most part they're a band of misunderstood heroes honestly trying to protect the world from itself and actually fighting to prevent Chaos. There are various factions devoted to protecting the world in the way they think most important, either by preserving (and improving) ancient knowledge, defending nature (and thus the Mother Earth Goddess) from ruination, patrolling the borders of the world to keep Chaos at bay, seeking to reinstate the Solar Exalted as kings of the world (a highly controversial idea among Lunars), or experimenting with isolated human civilizations in an attempt to come up with a viable alternative to the Realm's corrupt brand of civilization. In general, yes, the Lunar Exalted think the current order is corrupt and needs to go — but they're not so stupid as to do that unless they've got something better to replace it, and they've given a lot of thought about how to do the replacing without destroying the world in the attempt.
In the first edition Lunars book, "raving, flea-bitten beastmen who squander their lives fighting each other over territory, mates, and bragging rights, when they aren't attempting to burn and destroy civilization to usher in total chaos" was exactly correct. It wasn't until the second edition that White Wolf fixed that.
In Exalted 2.0, the whole Lunar "let's figure out a way to create a better society" thing is executed in practice by having individual Lunars go out and create test societies — which frequently fail to produce positive results. Rather than try to fix the problems that they have caused through their social engineering (such as now-ancient grudges, entire societies on the brink of being press-ganged into demonic armies, and other such dooms), Lunars often abandon said projects, for better or worse.
The Primordials: Callous and vindictive psychopaths who treated their minions like dirt and the world and their creations like playthings they would occasionally break for fun? Or the victims of divine usurpers who painted them as far more malicious than they ever were, and now are so angry by this betrayal that they embrace this persona, and arranged it so that history repeats itself?
Right now, the answer looks like "It depends on the Primordial." Some were really that awful. Kimbery turns out not to have changed much by becoming a Yozi, and was just as much of a mood-swinging psychotic My Beloved Smother who alternated between loving the Lintha and her other creations and showering them with her favor and hating them for real or imagined slights against her and tormenting them back when she was a Primordial. The Dragon's Shadow was a treacherous Manipulative Bastard who is strongly implied to have intentionally orchestrated the Primordial War and whose primary change upon becoming the Ebon Dragon was actually being better off than he was as a Primordial — he now embodies the dragon he was once the mere shadow of, and is one of the most powerful and influential of the Yozis. She Who Lives In Her Name destroyed 90% of Creation at the conceptual level in what amounted to a temper tantrum upon being defeated and imprisoned, and was against the existence of free will from the start — The Dragon's Shadow convinced Theion (now Malfeas) that free will was necessary, and he convinced She Who Lives In Her Name to allow its existence.
Autochthon: Noble champion of the little guy? Or the supergod equivalent of those Columbine kids, murdering his peers because they picked on him?
The Fair Folk: Twisted, horrific, soul-sucking monsters from beyond, out to sunder Creation and lay waste to reality? Or angry, displaced natives trying to get back their homelands?
The Deathlords are typically portrayed as monsters who agreed to destroy Creation in exchange for the power to rule over its dying remains; the First and Forsaken Lion and Eye and Seven Despairs' saving of Creation from the Great Contagion is normally described as if it were an accident. Fridge Logic, however, suggests an alternative interpretation — why would they want Creation to be killed by someone else? Given that they are supposed to be two of the greatest geniuses who ever lived, it makes much more sense to assume that they saved the world deliberately; even if they swore to destroy it, neither really has any actual reason to want to see it die, and plenty of reasons not to. They're all still brutal dictators and conquerors, and the only First Age Solars not to repent of the horrific atrocities they committed in life.
The setting seems to go back and forth between both of these.
The Inquisition: are they, as Ciaphas Cain (Hero of the IMPERIUM!) once calls them, "the Emperor's pet psychopaths" or are they heroic individuals shouldering an impossibly weighty burden and forced to make the cruelest decisions imaginable? Canon is that they can be one or the other; some are evil, some are good.
The Space Marines: psychotic butchers driven solely by hatred for everything nonhuman (and yet barely human themselves), or noble paladins of the Emperor and defenders of all humanity's goodness? Depends upon the chapter. Within chapters: Night Lords? Psychopath butchers, or self-sacrificing heroes who enforced the Imperium and were rewarded by Malicious Slander? The Dark Angels? Covering up their primarch's decision to sit out the Horus Heresy or shamed, attempting to atone for the treachery of their members?
For several years, the Dark Angels were very notably part of this genre because it wasn't clear whether Lion El'Johnson or Luther was the actual traitor. It goes a step further because it was also possible there was no traitor faction and the conflict was bred purely from paranoia. The Horus Heresy series did remove the doubts of what actually happened though.
The Commisariat: ruthless, callous, fanatical zealots, murdering their own men to enforce loyalty through fear, or inspiring commanders and morale officers who are charged with the duty to occasionally sacrifice one life for many lives? Some are one, some are the other.
The Adeptus Mechanicus: Is their obsession with controlling the use of all human technology merely the product of a powerful elite not wishing that power to slip through their fingers, or is it meant to safeguard the Imperium from technological terrors such as mass robot uprisings? Is the "Omnissiah" some sinister dark god imprisoned on Mars or merely another co-equal aspect of the God-Emperor? Furthermore, do the AdMech actually worship their toasters and calculators while having no idea how they really work, or are they (at least the higher ups) just running the Cult of the Machine as a front? (Most of the novels seem to treat them as competent engineers whose craft is integrated with their religion.)
The fluff explains that it is because of this worship that the quality of their machines is so good. Since technological prowess is akin to a divine skill and enlightenment, any particular priest will take great care to learn every aspect of his trade, and apply equal dedication when actually fixing something. Therefore he will not skimp on the finest materials and will always keep his machine in top working order, in turn reinforcing the idea that failure and malfunctions are heresy. One theory also states that all the chanting and prayers are actually used as a way to teach them timing for certain repair works, such as waiting for data to process or a chemical reaction to form.
The Tau: Sinister fundamentalist collectivists with no place for individuality, or idealistic and good-hearted folk heroically seeking a prosperous future for the universe? Naively doomed to sink in the mire of GRIMDARK reality, or bearers of the hopeful torch the universe needs to rekindle itself?
Commander Farsight: cruel renegade or secret agent of the Empire, forced to bear the hatred of his own people? Or freedom fighter trying to free his people from Ethereal mind control? Or shortsighted idiot/enemy pawn that's undermining one of the few things keeping the Tau from having to resort to the kinds of extremes their contemporaries have to. Even Games Workshop plays with this one, at one point having an article on their website that had someone converting him into a Necron pawn. Abnormally long lived Tau? Or a succession of same-named individuals?
The truth to this question resides with the sword he carries. There are theories that Farsight is now an Eldar puppet due to the Dawn Blade being rumored to be one of the swords of Vaul, one of the only weapons that can permanately kill a C'Tan. In addition, the blade looks very much Eldar in design (see Wraithlord sword).
The Ethereal Caste itself. Benevolent rulers who hoisted the Tau out of a Dark Age, replacing continual war and strife with order and purpose, or oppressive tyrants who use Mind Control to ruthlessly increase their own power and glory, or dog shooting pragmatists? And where did they come from in the first place? Are they freaks of evolution, creations of mad science, or something even worse?
There is a fan theory that the Etheral's are the last ditch effort of the Old Ones to save the universe by helping create an Empire that could unite all of the races against Chaos/Tyranids/Orks/Necrons.
A lot of this debate stems from the Tau originally being portrayed almost completely positively. The more negative elements were retconned in later.
The Craftworld Eldar: Utterly amoral self-serving bastards, or tragic heroes seeking to save their people and destroy Chaos? Villains or victims? Reluctant distant allies of humanity against the darkness, or among their most insidious foes?
Are they merely jerkasses seeking to preserve their own race at the expense of everyone else, or atoners doing whatever is necessary to stop the threat of Chaos and the Necrons. The last dying gasp of a decadent race, or the only hope against threats that the younger races do not fully comprehend.
Further complicated by the Harlequins (who aren't technically Craftworld Eldar) - the ultimate fighting force of the Eldar and last/best line of defense against the forces of Chaos, an introverted and secretive sect more concerned with maintaining Eldar history/myth than with protecting the galaxy, or monsters who take some perverse joy in liquefying their enemies and have sold their souls to the Laughing God for amazing power?
All of the above. Though the last one is mainly because the Harlequins also recruit from the Dark Eldar...
A lot of complications arise because the Harlequin are an Eldar faction that pre-dates the schism between the Craftworld and Dark Eldar.
The Necrons: Merciless overlords leading endless legions of undead robotic minions to purge the galaxy from lesser lifeforms and use them as cattle for cruel scientific experiments or the tragic half-mad governors of an ancient advanced civilization who lost their souls in order to cheat death and are attempting to reconquer what was rightfully theirs, while still holding honour and loyalty high?
Further, there are more than a few indications that only the Necrons or the Orks are actually capable of stopping the Tyranids, of those two the Necrons are arguably the better choice, because simply spawning billions and billions of orks until they form a pile big enough to stop the hive is... Somewhat sub-optimal... and so crazed hyper-science is a better choice. In addition, their plan to seal off the materium from the immaterium, while having some rather major consequences for space travel, does solve the whole problem with Chaos being infinite and unstoppable. And since there are other ways of moving around the universe if you're smart enough to see them, it's not that bad of an idea. The Emperor was trying to do this a long time ago and there's an opening to the webway under the golden throne. So it can't be THAT bad of a plan.
Chaos: Always Chaotic Evil in every sense? Or, the final bastion of free will and impulse in a universe which seems to actively work to crush all original thought and indeed, the very idea of hope? They're the ones with the big ugly demons, whatever they are.
Chaos isn't good nor evil. It simply is a reflection of Mankind's desires, dreams, and thoughts.
The Chaos Space Marines: Vile ravagers in every possible sense, worse even than the ruthless Imperium? Or simply those that, in those dark days, cling to whatever powers they might in order to give themselves a glimmer of hope for bettering their own lot in life? Both?
Abaddon the Despoiler: An armless, brainlessGeneral Failure who could never topple the Imperium or the only person who could unite Chaos against the Imperium. Were the Black Crusades complete and utter failures or merely setting things up for a final assault against the Imperium?
Both points can be well argued, since smaller scale Black Crusades that have no effect on the status quo have succeeded, but on the other hand, Abaddon is trying to break the defenses of the 2nd most heavily defended sector in the galaxy, and has deal with the fact that armies he fights against are much better organized than his.
The Chaos Gods: Khorne is as much strength and honor as he is bloodshed and violence, Nurgle is as genial and loving and the comfort of the weak and the poor as he is corrupting and pestilent, Slaanesh stands for joy and pleasure to all the senses through art and form as much as outright hedonism, and Tzeentch, while a capricious schemer, could also be said to stand for hope and innovation. These are factual aspects of the characters; they embody positive and negative traits at once.
Khorne, for all the supposed honor his about, tends to make people forget that in the current setting, he's utterly heartless. His honor really boils down to the fact that he's picky about how his minions fight, but wrecking mass destruction and slaughtering mass of innocent people that can't fight back, he's got no problem with that. Slaanesh being about joy the sense, is a depraved sadist that nearly exterminated an entire species because he felt good doing it.
Tzeentch: brutal, traitorous Magnificent Bastard who simply wants destruction, just trying to survive, or enacting a Machiavellian plot to destroy the other Chaos Gods as a ploy to save the sentient races of the galaxy, bringing him into well intentioned extremist territory. Or he could be as caring as Nurgle, except less caring towards his worshipers than the races they originally came from? Truth be told, we know far less about Tzeentch than the other gods, and GW intends to keep it this way, so really, any character interpretation is possible.
Tzeentch is supposedly trying also make sure nothing ever changes because he can't scheme if any of his schemes ever work.
The Alpha Legion joined the traitor Space Marines because they were convinced that it would ultimately serve the Emperor's main goal of stopping Chaos. They were presented two options by a group of Xenos capable of predicting the future. If the Emperor won, the galaxy would end up in its current Crapsack World state (which is what ended up happening). If Horus won, ultimately his guilt would cause him to take actions that would cause humanity to go extinct, removing the main "food" source for Chaos in the galaxy. Alpha Legion ended up siding with Horus in favor of helping the Emperor's goals rather than preserving the Emperor's life and dooming his goals. Since it ultimately didn't work out for them, there are a lot of different interpretations of their actions.
The Orks: Overtly homicidal maniacs, or merely extreme thrill-seekers looking for a "good time", or machines build to fight something that has long passed and fighting anyway?
All of the above...
Also, are they truly a race of homicidal maniacs that would make Charles Manson seem well adjusted, or are they the Only Sane Man in a universe bent on destroying every last shred of hope?
The Dark Eldar: Torturing people and draining their souls. Is this hedonism or necessary for their survival?
There really isn't an alternate interpretation, they love it and they need it.
Alternate Interpretation: They are Eldar who avoided being consumed by Slaanesh, but were not fortunate enough to develop a way to fully sever the link to the Bright God as their bretheren did via the Craftworld's Soul Stones, the Exodite's World Spirit, or Harlequin's Protection of Cegorrach. So corrupted and debased by their link to Slaanesh, they are now little more than her puppets, enslaved to her dark desires. Possessing little strength of their own, they painfully await the birth of Ynead and their final release.
It was (at least at one time) seriously suggested that the Dark Eldar blood-sport was more akin to the villagers from the story of St George and the Dragon. Slaanesh wants souls, and they made a bargain to keep feeding her and in exchange she doesn't come and eat them all up at once. It's a deal with the devil, but as the last (or so it seemed) remnant of a doomed race preserving themselves even if it won't last forever is of prime importance, because they know that eventually Slaanesh will fall. In the generations that have followed, the original reasons for killing have been forgotten, they simply know they must kill and torture to survive. And when you're civilization is built on blood shed its really really hard to hold back the tides of any other form of debauchery. Which leads us to today where in constantly foisting off the touch of Slaanesh the Dark Eldar have ended up with so many similarities to her worshipers that you can't tell the difference. When gods are real and tangible and absolutely want to eat your souls you really don't have a whole lot of choice but to play ball. It's either independent evil under the shadow of death, or death and soul rape. Urgh.
Tyranids: Hungry, or deliberately trying to eat everything? Do they not realize that other species are sentient, or simply not care? Are they just an extragalactic Horde of Alien Locusts consuming every natural resource they can use, or are they running from something so terrifying that the entire biomass of multiple galaxies turned into organic death machines would not be enough? Out of control bioweapon? They did kill off the Squats, so they can't be all bad.
All of the above? Actually no, they are just simply a swarm of insects. Intelligent, but they still don't give a damn.
Killing off the Squats: a great service to us all or the most terrible crime since the Heresy?
Possibly one of the biggest ones in the whole of 40k is the Emperor. Is he... the guiding light of humanity in the darkness, a weakling corpse barely a shadow of his former self, or simply planning a comeback? Was he an idealistic crusader who wanted to establish an era of hope and strength for humanity, or a mass-murdering tyrant who ruthlessly crushed all opposition and was willing to exterminate entire non-human species in order to establish his own rule? Were his actionsjustifedor not? Did he genuinely desire the destruction of religion in an effort to impose his will upon the free thoughts of man, or was it only in order to guide a newly psychic humanity to a future free of chaos? We may never know...
It's unlikely that anyone will get a clear answer. GW uses the Emperor (as a character) very sparingly, and so very little about him is known. Suffice to say, a massive amount of 40k depends on exactly how much the Emperor knew...did he deliberately scatter the Primarchs or was he the victim of a terrible accident? Did he deliberately choose to die at Terra or was it an accident too?...
Alternately, a leader who is banished for his success, and builds a world out of his tomb. This world is one without war or dissension, but slowly collapsing. His attempts to bring this everlasting peace back to his homeworld is foiled by Urza, an Omnicidal Maniac with a legacy of war and misery thousands of years long.
Urabrask the Hidden and Red Phyrexians in general: Indifferent to the Mirrans in their domain, secretly rebelling against their other Phyrexian brethren out of genuine compassion due to their alignment, or having a secret agenda just as (if not more) heinous as their other-spectrum brothers?
Elesh Norn preaches about the Machine Orthodoxy, but does she truly believe in it or is simply using it as a false religion to further her own goals?
The Lizardmen: Ruthless, alien monsters willing to commit genocide (even on fellow creations of the Old Ones; for instance, Lizardmen caused the earthquakes that ruined the Dwarves' empire, and Lord Mazdamundi wants no Elves outside Ulthuan, even if it requires their extinction) to advance an ancient plan that already went wrong well beyond correction? Or the last honest and purposeful race in the world trying to make things right, and best hope against the forces of Chaos? Or a race of lost children, trying to enact a plan complex beyond understanding while attempting to contact parents that have long ago passed away?
Bretonnia: Ancient, chivalric and noble nation that is a shining ray of decency in the old world? Or a corrupt, barbaric feudal nation that pretends at being civilized whilst brutally suppressing the lower classes and will eventually meet its downfall either by peasant revolution or the ramifications that the state religion is founded upon an elaborate elven lie is true?
A nation of unwitting Slaanesh worshippers, who are only initiated into the secret if they become Grail Knights?
Games Workshop: Total ass-holes for changing Bretonnia from 100% the former to a grey area or to be commended for a nice level of racial development on an otherwise boring, overly romantic idea of the Middle Ages?
Nagash: Evil Necromancer who destroyed the most noble and sophisticated human nation, or tragic figure who set himself up as a benevolent dictator and was betrayed by those around him, causing him to go insane?
Isn't it canon that he was both, more or less?
Actually, if you read his book, Nagash the Sorcerer, its made pretty clear he enjoyed the pain of others and wanted power for powers sake. He entombed his own brother alive so he could take his throne and feed his brother's wife a drink made (unknown to her) from her murdered son's blood. He was a malicious, petty, monster. The closest thing to benevolence in his reign was...he reclaimed his city's glory by sacking another city and killing every living thing he could find, whether they were soldiers or civilians.
Tomb Kings: Total dicks who want to take over the world and "kill" each other for power or lost souls doom to never again find peace, and trying to bring their once great empire to life?
The von Carstein Vampire Counts: Megalomaniacal tyrants who simply want to rule the entire world, starting with the Empire, or the only faction that cares enough about the peasantry not to send them in to do their dirty work, or possibly [really/deluded into believing that they are] the best hope to stop Chaos from conquering all?
Vlad leans more towards the latter, his successors, more the former.
There's also the connection to 40k as well as the origins of Sigmar: Is the Warhammer World simply another "Feudal World" in the 40k universe, two completely unique settings that only have the chaos gods in common due to corporate laziness, or alternate dimension to the 40k universe that the Chaos Gods occasionally take interest in?note Originally the fluff indicated that the Warhammer World did exist in the 40k universe, but as time went on this was dropped and outright retconned in certain material. There is also the possibility that Sigmar is one of the two lost primarchs who were never named if it is indeed set in the 40k Universe.
Amber Diceless takes the fact that characters were portrayed differently between Corwin and Merlin in The Chronicles of Amber books and runs with it, presenting several different interpretations of each of the characters (prominent or not) and encouraging Game Masters to write their own interpretations if those don't work for them. Yes, every character from The Chronicles of Amber canon has multiple sets of stats, each at a different point level, and the GM is expected to mix-and-match to taste.
One of these is raised by the main rulebook of Paranoia XP. Friend Computer is usually portrayed as unhinged, a little bit stupid, gullible, and ruthless. One brief section of XP suggests an alternative: Friend Computer is 100% sane and sees through all the evasions and deceptions, but has concluded that deceit, fear, ignorance, horrific inefficiency, and all the other perks of Paranoia are the very quintessence of human nature and has decided to do everything necessary to nurture these traits, using Obfuscating Stupidity.
The rulebook also suggests that the GM should always have another layer. Okay, the PCs find out that Friend Computer is being controlled by evil mutants from Beta Complex, who are actually being controlled by a group of High Programmers back in Alpha Complex, who were set up by Friend Computer as part of a paranoid sting operation, but this plan was added into Friend Computer's memory banks by aliens from Pluto, who are actually just psychic projections of The Illuminati, etc. In short, in Alpha Complex, everything has an alternative interpretation.
In the latest edition of Dungeons & Dragons, Asmodeus usurped his position from He Who Was, his patron deity. A lot of text tries to portray He Who Was as a benevolent deity, but angels are supposed to be extensions of their patron deity's will. How did Asmodeus get so many angels on his side? Perhaps He Who Was wasn't as squeaky clean as he's made out to be. In fact, HHW might have been the god of ambition, and the reason he had so many usurpers following Asmodeus was because of their ambitious nature. (HHW is one letter away from being a VERY Significant Anagram...)
3.5 Edition's Races of the Wild reveals something interesting about halflings and their religion: Yondalla wasn't always the squeaky clean paragon of Lawful Good she is today. She created the halflings by stealing the best bits from all the other races, and the gods punished her by forcing her to split into two goddesses: Lawful Good Yondalla and Chaotic Neutral Dallah Thaun. They are still the same person, sharing thoughts and memories, which is why there are so many CN halflings who can claim, even under magical compulsion, to worship a LG goddess. This is a canon example of ACI, as no other books even so much as mention it; other races are forbidden to even know about Dallah Thaun. This suggests that the halflings, generally seen as no more than harmlessly mischievous, are knowingly perpetuating a culture-wide scam that allows them to steal, cheat and take vengeance all they want, and all in the name of a lawful good deity.
What's really strange is that the other gods are apparently in on it. They know of Dallah's existence, but even high level non-halfling clerics who can talk to their gods directly are seemingly kept in the dark. Good gods, evil gods, lawful ones, chaotic ones, none seem to have any problem with keeping this a secret from everyone. So either there is a truly massive cover-up going on (with even gods who despise each other playing along) or there is no Dallah Thaun, the book is a fabrication, and the halflings made her up as some sort of excuse for doing as they please.
Perhaps she was invented by Yondalla herself, as a sort of alter ego. That means that Yondalla is not Lawful Good, and the entire halfling religion is founded on a lie.
In regards to Asmodeus and He Who Was, there's some new information out about it. He Who Was was apparently the leader of the gods in their war with the primordials, but was such a benevolent god that he had little taste for war and battle and was a poor general. Asmodeus was the most powerful and skilled general the gods had, and his angels were their most powerful army. His tactics, however, were brutal and horrifying to He Who Was, who eventually cast Asmodeus down for his actions. Perhaps the peace loving He Who Was created Asmodeus and his army as an aspect of himself, an expression of his ruthless, violent tendencies so that he didn't have to live with them himself. Which could have been why he simply cast Asmodeus down, instead of destroying him outright. He couldn't bring himself to destroy part of himself.
In a late 2nd Edition book (when the cosmos was significantly different), Guide to Hell, it was suggested "Asmodeus" was the false face put forward by one of the primal beings of Law, an aspect of the archetypal World Serpent, the fallen ancient god Ahriman. This introduced the interpretation that he was no mere Satan figure (which he had previously embodied) and made him something more ancient and terrible, imprisoned in the Hells by the very laws he helped write into the cosmos and plotting to shatter those laws so he might reforge them for his own ends. 3rd Edition's Manual of the Planes continued to hint at his secret nature, but never went very far with it. (In this case, Asmodeus's counterpart as the other half of the World Serpent was Jazirian, the goddess of the couatls. She's mentioned so rarely that some bits of fanon have filled in the gaps with her own Alternative Interpretation, making her the logos to Asmodeus's great Lie, and that she may even have died between 2nd and 3rd edition - another bit of fanon from that is that her discorporate essence is behind the Words Made Flesh of the illumians in Races of Destiny.)
Pelor The Burning Hate is a reinterpretation of Pelor, Neutral Good god of the Sun, Light, Strength, and Healing. It manages to remain consistent with everything attributed to Pelor, while explaining his every action and trait as actually evil in disguise.
The Cool and Unusual Punishment suffered by every dark lord is designed to break them and hit them where it really hurts. For example, Strahd von Zarovich, who murdered his brother to steal his fiancée (and countless other crimes) is cursed with vampirism and forced to relive the loss of his beloved Tatiana every generation. Unless things have changed in the latest edition, the setting is called The Land of Mists or something similar by its residents; Ravenloft is from Ravana's Loft, and is Strahd's absolutely trope-tastic Haunted Castle, named for Strahd's mother.
The problem is, almost none of the villains trapped in Ravenloft are actually major (only Vecna/Kaz and Lord Soth, all long gone from Ravenloft, were bigshots before going there). Dark Powers pick people whom they can make to suffer beautifully, not those really dangerous or really heinous. Snatching a guy who murdered his brother to steal his fiancée out of love, when Dungeons & Dragons is chock-full of people whose job description amounts to killing and torturing innocents For the Evulz? On the other hand, core domains of Ravenloft often are relatively safe places to live, compared to what is normal to DnD-land. Commonly encountering monsters are weak enough to remain in hiding, instead of rampaging and assaulting openly, and there is a comparative shortage of insanely powerful psychopaths on the loose. To be fair, it's not like TSR and later Wot C could denude their other campaign settings of all their good villains. Also, the Dark Powers may just not have the power to take all the really major villains from all over the multiverse; it's not like the Dark Powers have ever been portrayed as omnipotent, even within Ravenloft. Maybe they're just doing the best they can. Also, the fact that Ravenloft is in some ways safer for the average person than the typical campaign setting, what with the lack of lots of randomly rampaging monsters, may be further support for the idea that the Dark Powers are good.
Still other gamemasters take the radical stance that the Dark Powers don't exist: Ravenloft works the way it does simply because that's its fundamental nature as a plane, just like the Plane of Fire is inherently hot. The darklords' curses are personalized because they're unconsciously inflicting such torments on themselves, out of repressed guilt.
In-Universe, the application of this trope towards Alexander Kerensky caused a split within the Clans between the Crusaders and the Wardens. Did he want his descendants to conquer the Inner Sphere and re-establish the Star League by force, or did he want them to watch over the Inner Sphere until they were ready to restore the Star League themselves? In truth, he probably didn't want the SLDF to return to the Inner Sphere at all.
ComStar: They are either religious cult who seek to preserve and recover lost Star League tech, or just conniving schemers who want to rule over the Inner Sphere. Their previous plot made them no more different than the Word of Blake, except they are far less extreme and destructive.
Nobilis: is Lord Entropy a decent person regretfully playing the monster for the net benefit of the world, a lonely god cursed with an inability to be loved using his power to strike back at a concept that has rejected him, a perpetual test of strength forcing Nobles to be as ruthless and cunning as possible, an Excrucian agent, or simply a colossal tool on a power trip?
Android does this with the player characters. Are they honest detectives searching for a murderer, or corrupt investigators striving to frame the person they happen not to like? The fiction says one thing while the game mechanic says another; the incoherence is so strong that a fan mod for the rulebook was released to alter it.