How was it created?
In the lab the Elliot owned, he ran a bunch of tests on Jay to try and figure out how to make magic possible. It took eight years, but eventually, he and the scientists came up with the particle and released it into the air.
What is it?
The Particle is just that: a particle. It's in the air, you can't escape it. It's like how viruses can be airborne.
What does it do?
Once someone breathes in the particle, it affects them based on how it reacts with their DNA. Some people gain the ability to control a power, others gain weird mutations like cat ears or a third hand. But some people get fatal mutations, slowly killing them.
People aren't the only ones taking in air and we're not the only ones with DNA. Animals, and even plants meet both of those requirements. This means animals and plants are screwed up as well. There can be flying wolves. A tree can attack someone. Nothing is off the table anymore.
Can some people not be affected?
Just like with viruses, some people are naturally immune. And just like with viruses, there's also a period of exposure before symptoms start appearing. The time it takes for the particle to effect each person is also dependent on how it reacts with their DNA.
Can someone have powers and a mutation?
Powers ARE a mutation, and the particle only creates one mutation. It's either ONE power or ONE mutation. You can't have a fire-breathing wolf with wings, that's just absurd.
Can the effects be reversed?
Currently, no. Elliot actually has a very painful and very slow fatal mutation, so he has his scientists desperately looking for a cure. However, there are power dampeners, which make powers and mutations halt for 6 hours. The effects of using these dampeners on a regular basis has yet to be recorded.
Disappearances
The lab needed people to test theories on, so, they got people. They didn't get consent from anyone though. No, instead Elliot blackmailed his guards into kidnapping hundreds of people over the course of the labs lifespan. Children, teenagers, young adults, even the elderly. More variety means more data to work with. Nobody was safe. And if you were someone Elliot was particularly interested in taking, god help you.
When someone disappeared from town, it was best to assume they were dead because it was extremely rare for anyone to come back. Even for those who managed to escape, they came back completely different. A shell of who they once were. It would be better if they were dead because just living with what they went through sucked all meaning out of their lives.
Most of the time, if someone manages to escape the lab and survives the three day journey to the closest place in civilization, they find Sam's house. He lives on the outskirts of the town and next to the forest since most of the town hates him, so he's the closest house to the lab. He tries his best to help bandage up anyone who comes from the lab, free of charge. If someone comes to his house to get healed for other reasons, there's a price, but those coming from the lab have nothing, they just need someone to lend them a hand.
Magic
Nobody really knows why people started gaining powers, they don't know why people are disappearing. It's just some unknown entity that may also be the cause of the strange phenomenon. Nobody knows how to control their new-found powers. It takes time to control and master the effects of the particle. Crime rates soared for a long time as people unintentionally were causing chaos by accidentally burning down buildings and stuff like that. It was sheer madness.
But magic wasn't the only thing The Particle produced. Mutation were everywhere. Kids were getting disowned and abandoned because they grew mutations that made them look like monsters or demons. Hospitals were flooded with patients. Everyone became paranoid about who was going to 'disappear' next.
This is why the lab started looking for a cure after making the particle. Hundreds of people were dying, and it was only a matter of time before The Particle spread to the rest of the world. And, Elliot had a fatal mutation, so that was also an incentive. More and more people were disappearing as the lab was desperate to find some kind of solution.