Nonhumans not returning to the Known Lands
Humans are a selfish, war-torn people. While there may be periods of peace among some small subset of humans, there will always be murder and wars. An enlightened, peaceful race will tend to wait (sometimes on the order of millenia) for humans to at least stop killing each other before making first contact (or for . This is also a common trope in many sci-fi works.
Humans not exploring the Unknown Lands
This is the harder question. Humans are inherently curious and adventurous - and hate boundaries. It'd be easy to say, but hard to justify, that there is some geographic oddity that separates the Known lands from the rest of the world. People will try (and die trying) to traverse the endless Chalk Desert, scale the impassable Verglas Mountains, and navigate the impenetrable Jungles of Fire. It irks me when stories have these kind of geographic frontiers to explain why there is no imformation about what lies beyond. There will always be someone willing to push the limits and try.
If you have magic in your world, you certainly could make it seem like everything outside the Known Lands is desolate and destroyed, but like I just posited, and like your bit of lore states, it still wouldn't keep people from trying to explore. In order to really keep people in, you'd need your magic not only to show desolation, but to cause desolation. Maybe surround the Known Lands by terrible radiation.
I think perhaps a better story would be that explorers do occasionally leave the oppression of the Known Lands, not knowing what to expect, and discover freedom. Maybe they stumble across another human city which deals fairly, espouses freedom, and everyone is peaceful and happy. Having found this "utopia", they have no reason to return, although they are free to. Everyone back in the Known Lands thinks that these explorers are all dead, and it makes them more and more reluctant to leave.