The Quarantine was instituted as the Great Plague began spreading throughout western Arad. As the plague was spreading extremely quickly with no known cure, the eastern nations worried that the disease would soon spread across the entire continent and so all contact with the western mainland nations of Sirak Drauth, Faedh Vil, Tatlhuecan, Aetgard, and Karnath was forbidden. Refugees continued to flee the plague-stricken lands, however. In an unprecedented act of cooperation between the nations of Grum and Nuum, it was proposed that massive barriers be constructed to keep plague-carrying creatures from spreading the disease further east. A massive wall was constructed in southwest Grum, cutting off Karnath from the East. Workers also entered the mountain pass on the west border of Grum with the intent to build a second wall there, but were saved the trouble when, to their surprise, they discovered a massive glacier blocking the western portion of the pass.
Nearly a century later, with the plague over and the old kingdom of Aetgard ruined, the Quarantine remains in effect. In addition to fear of potential carriers, now immune, bringing the plague east with them to infect those who never built up resistances to it, the Quarantine is also enforced in an attempt to contain the infested, canim, and nethrim outbreaks that have occurred in what is now termed the Lost Lands.
However, import and export trade has once again resumed in western mainland Arad. Trade occurs, but with some very thorough inspections and other tedious processes required. While goods can get out of the Quarantine, people still can't, barring a very select few with the proper authority, paperwork, and so on.
Grayish areas are port cities, where outside traders can come ashore to take care of business, but are limited to the dock districts, and access to the dock districts is restricted to specific authorized people who work as go-betweens between the visitors and the locals. Such people are regularly inspected, and thoroughly.
All that said, there is sure to be the odd illegal operation here and there. The quarantine is not perfect - it is impossible to flawlessly guard the entire western coastline of an entire continent.
Being exiled to lands within the Quarantine, particularly the Lost Lands, is a common sentence for offenders of outside nations who aren't quite bad enough to be straight up executed, or in instances where execution is deemed unethical or otherwise inappropriate.