Massive stars end their lifecycle in a supernova explosion, which blasts much of their mass off into space. the remaining stellar core either forms a neutron star or a black hole. The mass that is blated off contains many heavy elements formed in the star by nuclear fusion, and contributes to nebula formation. These nebulas coalesce to form new stars and their associated planetary systems. We can actualy see this happening in various places throughout our galaxy, with nebulas in various stages of coalescing and with multiple stars forming within them. Absorbtion spectra tell us about the materials these nebulae are composed of.
There is some speculation that heavy elements such as iron are also produced and scattered about in nutron star collisions.
(1) http://en.wikipedia.org/wiki/Galaxy_collision (2) http://en.wikipedia.org/wiki/Andromeda_galaxy#Future_collisi...
Why is it 4+ light years from any other stars? Did our sun pull everything out of that radius when it was forming leaving a whole bunch of empty interstellar space?
The sun would have accumulated material from the nebula it formed in as it drifted though it. The stars near us now are not the ones our sun was near when it formed though (except by extemely unlikely co-incidence), as each star is on a slightly different course round the galaxy, like water droplets in a very slowly rotating cyclone.
If another star were to pass by very close, it could be disastrous for us as it could severely disrupt the planetary orbits in our system, but that's fairly unlikely and there's no prospect of that happening for many millions of years at least. The space between stars is vast, even by comparrison to the size of stars themselves and their solar systems.
EDIT - on that last point, 4 ly is ~250,000 AU (the distance from the earth to the sun). If we asume out solar system is 100 AU across, that's still only 1/2500 the distance to the next star.
Also because we know how much material is released in a mrger and how much material there is in our galaxy, we can work out how frequent neutron star mergers are and these results agree with other independent estimates of frequency of merger.