I see this anytime the server disconnects me due to loss of internet connection even though the internet is perfectly fine on the second attempt.
The only fixes I have found are 2:
1) Completely close out of the game and launcher and make sure no ESO processes are running in task manager, then reload and relogin.
2) If the above fails, reset the entire computer to clear all affected memory. Login proceeds as normal.
This is very similar to the "Lua is reaching its limit" errors you get until you increase the lua memory limit. The game doesn't wipe or rewrite the memory it uses properly either on a timer or on zone change/logout-login.
We used to call these "memory leaks" in other games patch notes when they were found because they just kept stacking up until there was no room, either possible or allowed, and a crash occurred.
I've been having this problem as well, when I try and switch characters, whenever I am away from the game for awhile, the first character I log into works fine, but as soon as I try to switch, I keep getting "Unknown Error Occurred, please wait a few minutes and log in again". I have done everything from closing the launcher, to shutting down my pc, rebooting modem, then starting up PC again, Nothing works. I have been having these log in issues since 1T launched, some days, it takes a few tries some days, I spent hours trying to log back in. Opened two tickets one was completely ignored and the other one was given a generic response. Either this isn't happening to a lot of people so they don't consider it a priority or they don't know what is causing it and won't admit it.
You probably need to reinstall, or roll back to a pre-one tamriel backup and repatch. I had a similar issue with the dark brotherhood update until I reinstalled from a backup before that. This is why I always keep a backup from a working version of the game one patch back and update it right before the next large patch.
You've apparently tried everything else, and no matter how much it sucks, it will likely work.
Thanks for your reply Mystrius, but this whole thing was because I am a stupid idiot. Disabled Master Merchant, and now the game works great! Quicker load times etc...Somehow I had it my head I had already tried disabling MM and it didn't fix the problem. I felt like such an idiot! haha!