The Nightwell, similar to the Sunwell, is a massive font of magical power. Located within the Nighthold, it is the source of Nightborn power, though appears to be under the use of the Burning Legion and Gul'dan. It was created using one of the Pillars of Creation, the Eye of Aman'thul to combine the magical arcane font (presumably a small pool of the waters of the Well of Eternity) in Suramar Palace with the scintillating network of leylines beneath the city that intersected in The Arcway.
Over 10,000 years ago, during the first invasion of the Burning Legion, the ancient night elves harnessed the power of the well to cast a protective spell over the majority of Suramar City. Thus, for all this time, the denizens of Azeroth have believed the entirety of the city destroyed.
The survivors remained within this protective dome, believing the rest of the world had been successfully taken by the demons. They became the Nightborne and grew ever dependent upon the Nightwell that now shrouded their city in perpetual darkness. Over the great many years, the Nightwell has now become corrupted.
It is worth noting that the corruption of the Nightwell is evidenced in the deterioration of Nightborne to the state of Withered. The situation is one of dependence, not addiction. It is not reckless over-use of magical power (unlike Queen Azshara before the Sundering) or utilising/feeding on the magical energy of the Nightwell for spells (unlike the Wretched High/Blood Elves) that causes this corruption. Nightborne will fall to the corrupted state of Withered if they fail to ingest the Nightwell material in the form of Arcwine after a certain period of time, whether they utilise spells or not. In this way it has become like food. but food that will horribly corrupt your body if you do not ingest it. So being suffused by the Nightwell (unlike the High Elf case) is not the problem here. It is the Withered state that is fully corrupted, not the normal nightborne state.
- ^ BlizzCon 2015 Overview and Content Panel