To understand why evil happens, I think we must first ask ourselves, what would the world look like if it was absolutely perfect? If you just scratch the top of that though experiment, you'll probably get some very positive imagery, maybe some picture of you running through a meadow under a perfectly blue sky, but, if you follow that thought process all the way through, you'll arrive at a horrifyingly meaningless form of existence. Why? Because if we set an objective for perfection, we'll find that there is only one perfect response and action to every choice you make, in fact, there may only be one utterly perfect thing for you to be doing - ever.
For the sake of illustration, lets imagine that there were multiple perfect things that you could engage in. Now imagine waking up in your perfect home (which is identical to everyone else's perfect home), surrounded by your perfect family, who loves you not because they have a choice, but because that's the only thing they can do - after all, they're perfect too. You get out of your perfect bed and have the perfect breakfast, followed by the most utterly perfect mid-day activities and family time. You wow as you enjoy the perfect picnic at the perfect park, your taste-buds burst in ecstasy as you consume the perfect dinner with your perfect family. After your dinner, you engage in the most remarkably perfect sex in the most perfect position with your perfect partner, and at night, you and your family all lie together in the meadow, looking up at the perfect stars in the perfect night sky - each of you has gone through the entire day in an unshakable and unrelenting mental state of ecstatic loving bliss.
Now imagine that every single family on earth is doing the exact same thing that you're doing, perhaps at different times (depending on geographic location), and all without any choice to deviate from this objective 'perfect' state of being. Imagine that every day will be exactly the same and that you will never die, nor will you ever deviate from this state of existence.
Besides being terrifying to imagine, a perfect world, with perfect beings, and a perfect material nature cannot accommodate purpose, actual freedom, or a reason for being. In a perfect world, there are no problems to solve, no diseases to cure, no triumphs, no struggles, no tears, and no victories. In such a world, we would simply exist as choice-less beings with no objective meaningful purpose or means of defining our own existence.
Without the bad in life to define the good, good is nothing. When you see a beautiful sky on a sunny day, you can appreciate it because you've seen stormy skies that bring rain and chaos. In the same sort of way, when you love deeply, you can appreciate it because you've known what it means to feel alone.
A perfect world is like a perfectly white room in which you, and everything around you is also perfectly white. In this room, you see nothing, because there is no contrast to define one thing from another. The same would be true of a perfectly black room. It is only by allowing the freedom of both elements, black and white, that innumerable variations of grey emerge so that we can suddenly see the dimensionality of the room we're in and can define what lies within it.
So in our perfect world scenario, you can't really love or really enjoy anything, because you have nothing to define what makes anything worthy of your love or enjoyment in the first place. Everything you do, and everything that happens around you, is simply a set of autonomous actions with no reference as to why they're meaningful.
Perhaps then, it is more reasonable to view good and evil as two parts of an integral whole that are necessary to define one another as existing. We must consider that the greatest possible experiences of love, joy, or attainment exist in polarized contrast to equally powerful capacities for hate, sorrow, and failure. We, our world, and the universe it occupies are free, and such freedom requires both good and evil to exist as unrestricted and ungoverned potential. To limit the scope of how bad things could be, would be to limit scope of how good they could be also. Ultimately this would diminish our own depth of experience, leaving us with little more than a one-dimensional world of mindless, ecstatically positive feelings.
It is the bittersweet - the perfectly imperfect state of humanity that we love and celebrate. It's woven into the plot of every great novel, play, and film. It's present in the music that moves us and the art that stirs our souls. No legitimate studio ever produces a film that progresses through a sequence of unendingly positive scenes and dialogues because no one actually wants to subject themselves to that - it's not pleasant or meaningful to watch at all. Perfection is a state that we arrive at by knowing what it is to be imperfect and by being capable of either.
I believe it is our transcendent purpose to embrace our natural human intuition and engage in things like love, friendship, creativity, caring for our fellow beings, and improving the world around us. We find unison with G-d in this and we know the beauty, good, and meaning of it. It is the brevity and uniqueness of life that give it the profound meaning we place on it. Our ability to grow in our capacity to find the good, the wonder, and the amazement in life is the key to unlocking the paradise that exists within each of us.