Writing Backstory for a Sandbox

I've been fleshing out the backstory for the Terrace of Fallen Horses. I'm not going to go into it here just yet as most of my players are reading this blog and I'd hate to spoil the surprise. So why am I bringing it up?

I want a certain amount of verisimilitude in my world. In order to do that, I need to know why an adventure locale exists and what happened to it that it is now abandoned. This requires some thought and some backstory. The tricky part is determining how much backstory is worthwhile and what is wasteful.

By wasteful, what I mean is "material that the players will never learn and possibly CAN NEVER learn". What happened to the Horse Lords whose burial chambers the PCs have recently explored? I know because I need to know what to put in the tombs and crypts, but really, do the players need to know? Will there be enough evidence for the players even to make a guess?
Similarly, I have some backstory for Dropoff Tower and the dungeons underneath it. It was important to develop so I can describe what's there and give an approximate age (elven stonework, several hundred years old). It is possible the PCs will find enough information to work out what happened or at least make a very good guess.

Now, do I need to write enough history to indicate whether or not the Horse Lords interacted with the Elven Lords of the Forest? And what about the Underfortress of "Santa Fe"? I could, but is it really necessary? Is there any way the PCs will learn it? Will there be any evidence in any of the adventure locales?

I like writing as a hobby, so I'm inclined to write an overall time line and interlink the adventure locales, even if I'm the only person who will ever read the material. I'm also inclined to do it as I discover linkages through writing that I had not thought of before. This is the discovery part of writing I like, letting my subconscious work the angles and kick up anything interesting it finds while my conscious mind is dealing with the typing and the spelling and the simple descriptive text. I also set my vague thoughts down into something more solid, which can highlight things that might not work out or are more awkward than I thought they were.