Cid of the Lufaine (and there's always a Cid) created this experiment to create the perfect weapon. So, Cid created this battlefield to have a conflict between the forces of Cosmos, and the forces of Chaos. When one side won, Shinryu would rise up, wipe everything out, and start anew.
In Dissidia Final Fantasy (or Final Fantasy Dissidia), this was the eleventh cycle (as it's mentioned that the cycle happened ten times before), so Final Fantasy Dissidia Duodecim literally means twelfth conflict (Dissidia means conflict in Latin), and the game plays on the twelfth cycle of conflict.