So what actually happened in the past? I still don’t really understand. Was it something...

I think the summary is that due to one of the kikyo students going to the fireworks with one of the chidori students, the kikyo student was getting hassled by other chidori students which led to a fight which caused the kikyo student and her date to go over the edge of a hill which led to her being pulled from kikyo by her dad. This caused the harsh attitude in order to not have another incident repeat itself. Since it doesn’t look good for the school especially to the parents who just want their kids safe and studying not getting injured and physically scarred for life.