Man, you guys also don't know a damned thing about dear old Sephy, do you?
Sephiroth—the original—is the result of Hojo and Lucrecia agreeing to letting Professor Gast add JENOVA cells to their unborn child. Lucrecia was Gast's assistant, and Hojo was probably always a raving loon, so it's not too shocking that this would happen. Though Vincent Valentine, ex-Turk, wanted to stop Lurcrecia, he didn't have the courage. When he finally did speak up, Hojo did whatever Hojo does, leaving Vincent to spend a decade or two (iirc) in his coffin in the Shin-Ra Mansion's basement. No doubt he was witness to Sephiroth laying waste to Nibelheim. Lucrecia died in childbirth, and Hojo told him his mother was JENOVA. This would prove to be very important.
Sephiroth is the culmination of the JENOVA project. JENOVA is a lifeform that fell from the heavens, as told by the Cetra. This obviously means space (which is clearly why Shin-Ra wanted to go to space at all—they are not interested in exploration but rather the spoils of conquest). He was put into SOLDIER and took on the job of training the "recruits" who were just like him: Zack and Cloud, first and foremost. It's not stated implicitly, but there is no other reason they would go along with him, when he is more accurately carrying you on his shoulders during the "flashbacks".
Hojo doesn't ever stop at JENOVA cells, though. While arguably more powerful than makou infusion, they aren't really going to last forever, so he begins cultivating SOLDIER recruits in vats of makou, sometimes going too far and creating the monsters we see during one of the flashbacks—though he did infect a precious few with JENOVA cells from time to time; most notably Cloud, Zack, and all the black robed men you see around. (Personally, I think this is the best explanation for monsters I've ever seen in a game; most games [FF8, Legend of Dragoon] say they come from the moon. It doesn't make sense for monsters to exist, so I am glad that it was explained well in FFVII. As Barret says, "Damn, Shinra! The more I hear, the more I hate 'em!") And it isn't as though turning men into monsters via makou energy is unheard of: the WEAPONS are monsters created by the planet for defense out of the Lifestream, which is what makou really is. Enraged, Sephiroth destroys the vats. He realizes Hojo fucking up is the reason he is out here in the sticks at all.
Later in the same series of flashbacks, we see Sephiroth in the hidden basement library in the Shin-Ra Mansion: the place all of Gast's old journals ended up. He pages through them. Cloud approaches him, only to be ignored. He hears Sephiroth reading aloud to himself: "
...an organism that was apparently dead, was found in a 2000 year old geological stratum. Professor Gast named that organism, Jenova... X Year, X Month, X Day. Jenova confirmed to be an Ancient ...X Year, X Month, X Day. Jenova Project approved. The use of Mako Reactor I approved for use... My mother's name is Jenova... Jenova Project... Is this just a coincidence? Professor Gast... Why didn't you tell me anything? ...Why did you die?" This is when he begins to realize that he has been wronged. He begins to realize he was one of Hojo's experiments. Father or not, Hojo is going to pay—this is Sephiroth's resolution.
The next time Cloud visits him, Sephiroth calls him a traitor.
Sephiroth: Ha, ha, ha...... Who is it!? Hmph...traitor.
Cloud: Traitor?
Sephiroth: You ignorant traitor. I'll tell you. This was an itinerant race. They would migrate in, settle the Planet, then move on... At the end of their harsh, hard journey, they would find the Promised Land and supreme happiness. But, those who stopped their migrations built shelters and elected to lead an easier life. They took that which the Cetra and the planet had made without giving back one whit in return! Those are your ancestors.
Cloud: Sephiroth...
Sephiroth: Long ago, disaster struck this planet. Your ancestors escaped... They survived because they hid. The Planet was saved by sacrificing the Cetra. After that, your ancestors continued to increase. Now all that's left of the Cetra is in these reports.
Cloud: What does that have to do with you?
Sephiroth: Don't you get it? An Ancient named Jenova was found in the geological stratum of 2000 years ago. The Jenova Project. The Jenova Project wanted to produce people with the powers of the Ancients......no, the Cetra! ...I am the one that was produced.
Cloud: Pr...produced!?
Sephiroth: Yes. Professor Gast, leader of the Jenova Project and genius scientist, produced me.
Cloud: How...how did he...? Se...Sephiroth?
Sephiroth: Out of my way. I'm going to see my mother.
And so we see it. He realizes, after days spent reading, that he is the final heir to the Cetra. If JENOVA ever "fell from the sky", it was because she traveled to the planet with the rest of the Cetra (as explained elsewhere). Realizing this, he goes to see his mother. On the way, he destroys Nibelheim for the hell of it.
I'm going to pause here. Does Sephiroth have a reason to be pissed yet? Hm, he was an experiment, lied to, and then used to cover up for his sniveling father's fuck-ups in some mountain town? No, I'd say he has no reason to complain. None at all.
This also causes him to go a bit batshit. He goes to the Nibelheim reactor and pulls the JENOVA cells from the back room, talking to himself about being the chosen one and "Mother's rightful place as ruler of the planet". While it is possible that JENOVA
could have spoken to him as Sephiroth later spoke to his puppets, I am not sure she did, and he may have just been off his rocker at this point. In response to all this bullshit, Cloud tells him to calm down, which gets him a sword through his chest for his trouble. But you know, Cloud is resilient, and made of nearly the same thing as ol' Sephy, and promptly takes the sword out and chucks Sephiroth into the core of the reactor, which connects straight to the Lifestream. (Hence later he is in the crater, frozen in makou.)
This by no means puts our dear boy out of commission. Instead of doing his dirty work himself, he uses the power of the makou around him and his own JENOVA cells to take control of the minds of all the SOLDIER members who also have JENOVA cells. Some die, but many do his dirty work well enough; often they transform so uncannily into him that everybody in the damned world thinks it was Sephiroth who kills Aerith, when in reality it was one of his puppets. All of these puppets, after fulfilling their purpose—recon on the boat to Costa del Sol, killing the other last surviving Cetra to ensure his place as Emperor-God, etc.—transform into the JENOVA beasts you then fight: Birth, Life, Death, and Absolute. Side note: they never walk through walls or teleport. The game is told from Cloud's perspective. You are seeing them flicker because Sephiroth is messing with Cloud's mind
for fun. He knows what Cloud is, what he has done, and what he will do. He lets Cloud get the Black Materia, then makes him give it to him.
It is a game to Sephiroth. He is hoping that Cloud is abandoned (thereby sharing the same fate that Sephiroth believes he had) rather than killed. He is very much a masochist in this regard. You'll also note that he only outright kills those without JENOVA cells, such as President Shin-Ra, or the Midgard Zolom.
Sephiroth doesn't just want to destroy the planet. He isn't mad at it so much as the people living on it; they are the descendants of the people who let his mother die. That is why he summons Meteor. He knows that the planet can repair itself if only Shin-Ra stops draining it, and isn't worried. As you should know, the Cetra were not indigenous to the planet, they merely met their end there. Before that they traveled space, planet hopping, searching for the Promised Land. My personal theory is that the Cetra did find the Promised Land in the form of the Lifestream, and they "returned" to it by letting themselves die while the ancestors of modern humans protected themselves. If so, that only adds to Sephiroth's character; he is so mind-warped and crazy that he doesn't understand the Cetra wanted to die, and he is stuck in the Promised Land. This technique is called "dramatic irony". But that's a theory better fleshed out in another post.
Shin-Ra begins to take notice once he summons a giant rock (with bad transparency around the sides) and holes up in the crater, so they decide to shoot him with the Junon canon (The Sister Ray) from Midgard. Sephiroth takes this as his cue to unleash the WEAPONS, which go on to wreak some fucking havoc. This is about when Cloud decides he needs to finally kill Sephiroth, who just doesn't understand the concept of simple human life anymore, and does. Though Sephiroth throws one final clone at the team (JENOVA Absolute) and transforms twice in an attempt to kill them, it's not enough by that point. Cloud has stopped caring that Sephiroth is some kind of batshit telepath and straight-up kills Sephiroth, shirt or no shirt.
I don't know, maybe if you had the reading comprehension of a ten year old (and I know many of you probably did) when you played this game the first time, I don't think this is terribly hard to understand. It's a simple matter of a man who was wronged by a corporation and his father, which led him to an investigation, which led him to go crazy and try and bring about a new era. I guess he isn't necessarily a villain so much as he is just really pissed. It's very clear that throughout the game Cloud is basically fighting this guy for no reason, because Sephiroth is really just playing around with him while he tries to accomplish his own goals (occasionally using Cloud to help). If you want to talk about Cloud being a shitty protagonist, we can talk. I've got some things I could say about him, as well. But don't you dare talk about Sephiroth. He is one of the few great villains around.