the general idea behind a system like this is essentially allowing you to take a current character and start the game over with some kind of benefit. there are a lot of reasons to do this (mechanical, cosmetic, extended game life, etc.) but the concept stays the same, this is my outline / ideas for how such a system could work in ESO.
you would be given the option to choose if you want to reincarnate at Vet rank 1 (or whatever this turns into in the future) this means if you made a mistake or don't like your current character you have the option before progressing into the long term grinds.


now, what this does and the possible benefits of this system:

-allows you to pick and choose a new class / race / faction for your character without completely loosing all investments in that character.
-allow you to keep skill ranks you have previously unlocked (meaning if you had a rank 50 enchanting it would still be rank 50 when you reincarnated)
-allow you to keep alliance and vanguard rank / rep
-allow you to keep all achievements and achievement progress you have made thus far

possible other bonuses
-keep skyshards / skill points?
-a reincarnation buff allowing all xp (non vet) to count towards champion points (meaning 1-50 would count towards champion points)

the reason behind said system?

some people enjoy the "hero" aspect of the game, and enjoy the 1-50 (and possibly the Vet 1-14-16) leveling and questing, however without the ability to repeat quests there does come a point where you have nothing left to do but end game repeatable content (trials, dsa, etc.) or pvp.

at this point all you can do is delete a character you have played and for however long amount of time and start a new one from scratch, and that's a very sad prospect as a lot of us get attached to our characters. (I understand some don't, but you don't have to participate in said system)

on the game side of this it grants no meaningful bonus over someone who has progressed to vet 14, and someone who has reincarnated and progressed to vet 14, if they both played the same amount of time they should be on the exact same playing field.

and in the end this provides a single character a theoretical endless amount of content, as well as gives players ways without deleting characters to play every race / class / faction combo in the game. . .possibly on the same character if they so desired.

PS: you could create specific tiny passives for reincarnation so that it granted a mechanical bonus (ala DDO) but I am personally against this sort of thing.