The Flight of the Sun
The untouchables are perversion of high elves their forefathers once were. By the will of the Sun god and the Emperor himself, the elves were struck by a horrible disease – destroying their fair bodies, leaving festering wounds and boils on their skin, making them rot while still alive.
In addition to that, and in order to prevent them from becoming powerful and dangerous as they once were, the untouchables must never be taught to read or write, nor to use, or benefit from, magic of any kind. Teaching them or helping them to do so is considered blasphemy and treason, punishable only by swift and cruel death.
No infected elf can live for more than 60 human years; they mature faster, they breed, and they die. Once dead, their bodies are burned at the stake. You may consider that a symbol of unending mercy of the Sun god; purifying, in the end, both their bodies, and their souls.
Due to the infection it became dangerous – if not deadly – to touch an elf. Therefore they became the untouchable; banned from the towns and exiled into the pits and slums around cities where they could work to earn their food.
By law, they must cover their faces and entire bodies with blue cloth, their disgusting figure never to be exposed neither to eyes nor, even accidentaly, to hands of the clean ones. No other creatures wear blue color. It is a symbol of degradation, filth and death; of the blue-clad ones.
The untouchables may have been powerful once, but today their only purpose in this life is to atone for the sins of their fathers by quietly and tamely accepting their suffering, and serving the races that have – ever so mercifully – allowed them not to perish.