Namely, i shall explain the plot, plotholes, and connections, for they are not as obvious as they seem. on first inspection there are no faults, but in detail the settings and endings of the games seem like they don't match. You might attribute this to lazy storytelling, but you are very wrong, observe.
Phantasy star 3 is actually where everything begins.
Let's look at one of the endings, in fact the only one of any relevance.
The ship reaches completely normal planet Earth and establishes contact.
Yet in PS2 the ending lets us know that humans are colonizing other planets (namely yours) and Earth is abandoned and in ruin.
It can be safely assumed that the ship has traveled in time (check the ending) and reached Earth before any of this happened.
The current status of the ship had some examples of extremely high technology, techniques (actually photon manipulation, NOT MAGIC), and contained the one and only deceased Dark Falz. (now we can assume that dark falz spreads it's influence wherever it goes, and eventually profound darkness will appear somewhere in that circle of influence)
Humans rapidly began to reverse-engineer, they learned techiques, mastered and improved the technology.
Because of Dark Falz, humans missused and/or overused what they acquired, ultimately decimating Earth, so they moved to another planet to colonize, namely the one in phantasy star one.
Look at what you see in PS1, it is a magical and medieval place, yet technology seems integrated, although somewhat inconsistedly, you can fight both a robot and a dragon in one game. Of note also is that your characters only use MAGIC, not photon manipulation!
The humans probably masqueraded as normal citizens, and through "new inventions" pushed this planet into a techno-mystical phase.
Dark Falz (or rather profound darkness') first servant appears during PS1, but you know the rest.
In phantasy star two the humans have completed the planet's conversion, they indirectly control the entire planet through Mother Brain and have made techniques (photon shit) available for everyone, of note(and emphasized throughout the game) is the genetic engineering outbreak going on, causing mutants, biomonsters, and the like.
Humans have become aware of Dark Falz and have sealed it in pandora's box, much like how it was sealed in phantasy star 3, and they release it at the heroes in a last-ditch attempt to stop them, therefore unleashing it again, of note is that Dark Falz does not appear throughout the game in any way before this encounter, proving the humans sealed it.
After the destruction of Mother Brain, humans flee in their spaceships, over time they forget their roots and live like barbarians, while some use technology without knowledge of it's origin. Enter phantasy star 3, again! The techniques are horrible in this game, they contain no magic, they are just photon rubbish. Much time has passed since the destruction of the other 398 ships, and almost 1000 years have passed since dark falz appeared the first time. You know what happens to the ship, but now we go to
Phantasy star 4, in which...there is nothing to explain really, this is just the aftermath of PS2 and has only a slightly-better situation than the PS3 spaceship and the final battle is at hand due to Dark Falz' prophecy.
So basically humans have created a stable time loop where they perpetually destroy themselves and algo.
however phantasy star 4 breaks through and moves past it, even though the humans are still stuck.
since the destruction of the other 398 ships
And yours was one of the last two... I wonder what came of the other one..... go play your stinkin PSO2 now, it's part of the story.