What sort of circumstances would need to arise in a fantasy world for ALL combat to be handled through nonlethal...

The video game Pyre is this.
It isn't out yet though.

Some powerful entity or group of entities forced these rules into place by convincing everyone that following them would be in their best interests, and obliterating any dissidents along with everyone they ever loved.

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>Ideally, it should NOT involve divine intervention.

Wizards != divine intervention.

It's not even wizards, it's just plain rule of steel. Might makes right and all that.

There is literally not one good thing about it.

So were you born with no taste or did you lose it in an accident?

Tet was born just as the literal and conceptual trophy of winning the war itself appeared because of the concentration of godly power fired by Riku made every single one of the big players in the final battle ground too weak to get it.

Everyone at birth is fitted with a mcguffin that kills them if they start proper fighting. Somehow every birth is caught, none ever go undetected. Don't ask me how.