I can honestly say the most peculiar and outright funny characters in ESO is in Cyrodiil. Just in the past 24 hours while looking for delves to grind in, I ran into a Khajiit north of Farragut whom when you talk to her, she gets angry when you tell her that her painting is blank and then exclaims "I bet you think I'm drunk! I bet you're right".
Also, just now, I came across a hut with a necromancer north/ northwest of Drakelowe Keep who is having a "party" and when you point out that the other guests are all dead he says "no, no, no. They're just shy at first"