This is exciting. Lol
I am pretty open to where we start, in terms of level. It sort of depends on how detailed we want to get versus how long you want this to take. We can start at 1 and go level by level... but it will take a while. I'm open to whatever you have in mind. I know it's a bit of a cliché answer, but I mean it. We're effectively worldbuilding for another game, so you're the one with the big picture, y'know?
I will say that I think creating my character should be the same process as your PCs will use. That way it's sort of a level playing field in that regard.
As for backstory...
I sort of had generic answers in mind, so the character would slot into whatever world you had in mind. Also, by utilizing rather common backstory elements, it creates a contrast between the villain and the PCs if any of the PCs also have similar events. The idea that, hopefully, at least some of the PCs realize they could have possibly ended up no different than the villain. That "one bad day" is all that seperates the paths they chose.
So with that in mind, things like... mother died in child birth. Father died during a raid on their small village (orcs, goblins, whatever works). Oldest brother (all first born sons in the village maybe?) got conscripted to fight in a war where he (or most of them) died on the battlefield. Crops failed one fall and the area was scarce on game due to other monsters in the region (whatever raided the village is overhunting), so many villagers have died from starvation. A disease -- even just a virulent strain of flu -- killed off the villains only sister (and many in the village) due to no healer. We could even have the town elder die from old age... weak and infirm, bedridden, wasting away due to time. All these ways to die, and our villain can control absolutely none of them.
The village sort of assumes everyone in it was NPC level, which I think would be common for most small villages out in the wilds. The town watch aren't characters with levels in fighter, they're just NPCs with the guard statblock. The town healer is just a commoner who has proficiency with the herbalism kit. Players often take magic for granted, so having small, outlying villages with no magic at all should offer perspective.
I'm thinking... by this point our villain was already pretty broken, having seen so many fellow villagers die. They set out to find help. That's when they run into elves. Maybe the Elves save the villain from those same orcs or goblins? Maybe an owlbear? But they take them in, start to teach them magic. (First level in Wizard.) But the villain still has to help tbe village, so after a while he heads off towards a big town.
Villain finds a cleric. But the cleric won't work for free, and the village is poor. Maybe the villain tries to get a druid to help with crops, but runs into the same problem. Keep in mind, PCs often expect a reward or paymemt for helping people with their problems. Let's use that. Spin it. Make a very common PC behavior part of the reason our villain went bad. PCs think they're out saving the world and doing good things to help people... but are they? The fact no one would help the village convinced our villain you have to take care of yourself. There's no help unless you have money.
I do think, as our villain grows in power, he would actually want to help his village. They went through all the same tragedies. Maybe the village starts to be a little better off.
I'd be down to build a village in addition to the villain, letting them sort of grow together. It would also be a good place for PCs to investigate the villain, learn backstory, pick up plothooks and clues, things like that. With the caveat that the villagers view our villain as a hero. The villain is the reason they're better now than they were five, ten, twenty years ago.
Ok... that was a lot longer than I planned. Lol
Well, drink it in and let me know what you're thinking.