Just read the faction bios...

This is indeed the prequel, prequel to GC and GC2. In the lore of GC2 it is mentioned that the dread lords can travel through space for a period of time, but cannot live up there for an extended amount.

Indeed. We are re-living the history of Altaria. Here is an excerpt from one of their tech description:

"Tandis was an Arnorian who took part in the great Precursor struggle on Altaria that became known as the Cataclysm. In that war, Altaria was devastated and it was during this time that the Drath began to leave with the help of sympathetic Precursors who remained.||Tandis arose again to aid the great nation known as "The Kingdom" in its darkest hour when the Empire and remnants of the Dread Lord allies, known as the Fallen, threatened to bring about the ruin of the world."

Sound familiar?

But Dread Lords in GC2 can't channel magic. How do you explain that?    

Those are their ships Ever stop to wonder why 10 of them can take out a garrison of a 1000 or more? Or the fact that in the mission you need the direct help of Tandis himself to make ships capable of holding their own against the dread lord ships?

It's magic. I don't have to explain it. This excerpts might do it, however:

"According to Drengin scientists, Death furnaces work by harvesting what the Drengin call the Aul. They claim the concept was originally from the Precursors (most likely the faction of Precursors called Dread Lords) who believed that Aul (what humans might call a ?soul?) can be harvested and turned into a form of powerful energy.||According to legend, the Precursors had immense amounts of this type of energy which, for lack of a better term, is called 'dark energy'. This energy was native to their existence and is the basis of their power."

"The Altarian race is the only race that has dark energy part of their inherent nature. While some races, such as the Drath have some concept of it, only the Altarians are innately...magical (as some humans might describe it).||This extra form of energy is not well understood but enough is now known to enable us to begin to systematically train our soldiers in its use. As a result, our soldiering ability is substantially greater."

That reminds me, Kingdoms should have access to Drath like in WoM.  Balance for the empires ogres and trolls.

Wow, you really have a thorough knowledge of the GC2  myth-arc!!

But just a thought...any sufficiently advanced technology is indistinguishable from magic... ...just saying

Someday, once they make the final game of the Elemental series, they should place in a tech victory where the victory cutscene ends with a ship orbiting Altaria and Anthis in view below.