Now was Evil unleashed in the halls of Heaven, now were all our woes made. For what was possible to alter was the fundamental strucures of how things are. Thus is the power of angels, not just the greatest. The Adversary was at the root controls of the universe. It was said they even ruined a part of Heaven: this is the Hell of story and myth, though not a place of eternal torture, and there came a time when it were torn away and into the earth.
Why does God let this happen? He waits to have just cause to act. Yes, He knows what will happen and why, but until it is real, it exists merely as potential—not enough to counteract. It would be unfair, too, to prevent the consequences of an individual with full faculty of mind. Those who go against guidance have no one to blame but themselves. And they are given room to repent, which may seem like unnecessary delay, but in an unfair world, we receive from God all that might be wise for us to notice. This is an article of faith.
Another text which is useful in the understanding of what went on is the Ainulindalë, by J. R. R. Tolkien, one of his lesser known works. It is the creation story for Middle Earth. In it, Ilúvatar, who is God, creates the Ainur, angel-like entities, who by their music cause to be the things that are meant to be. However, the greatest of the Ainur, Melkor decides he will go his own way, and not be in harmony with the rest, nor Ilúvatar. Sound familiar?