The Japanese ruled Micronesia from 1914 to end of WW2. Before hostilities started there, some of the islands had already been heavily fortified and become important harbours for the Imperial Japanese Fleet. Palau was one of these. On March 30th and 31st 1944, The US launched a massive air strike against the Japanese Fleet and succeeded in sinking a good part of it. Whilst most of the ships that went down were cargo vessels, some naval ships and many aeroplanes were lost as well.
Although Truk Lagoon is regarded as Micronesia's wreck diving "Mecca", there were actually more ships sunk in and around Palau - over 60. Most went down close to Koror and among the more secluded Rock Islands and it's in these locations that the wreck diving is mainly concentrated.
Generally, the ships lie in shallow water - between 15-30m - and are fairly accessable. Many of them have been heavily salvaged and are of no great diving interest now, but there are still some real gems that have remained remarkably intact and provide interesting and challenging dives. Amazingly, as most of the salvaged ships were being transported back to Japan after the war the convoy was hit by a typhoon in The South China Sea and all perished.
The main wrecks are described in more detail above. You will not be disappointed with the diving around Palau and there's plenty to keep you busy for a few weeks, if not months.