From what I understand, "Fire" and "Dark" are just names for the different cycles the world goes through. You started off with the age of "Dragon" because well, Dragons ruled. Then you had the age of "Fire" because it was brought on my the conquering races (Gods, Giants, and Witches) discovering "Lord Souls" (which I believe are basically elements of massive power) and ascending to become the dominant race. The Furtive Pygmy was probably a God, who found the "Dark Soul" or the power of the next age. The Pygmy was an outcast for his status and begot the Human race.
Now, the Gods and their ilk wished to hold onto power for as long as possible. Unfortunitely for them, the universe worked in cycles, and preventing the wheel of time from turning leads to catastrophe, as seen by how the kingdom in which Dark Souls takes place in is moving in and out of time, everything is falling apart, etc.
The Pygmy had predicted this, and left in his descendents a fail-safe; the Dark Sign. It would activate when the cycle failed to shift, allowing the Human race to try and get the wheel of fate moving again. If they didn't, then the universe probably ends. The prophecy is really just an instruction manual on how to rekindle the Fire and thus keep the previous age going, as Frampt & Co had been manipulating humans for as long as the Dark Sign existed.
By becoming the "Dark Lord" you're just forcing the universe to move on. There's nothing as to how good/bad/lawful/chaotic it is; you're simply breaking the last holds that the last race had on the world. They're not necessarily dead, but their power is gone.