Everyone take it easy. I know ESO and the Morrowind expansions are not EXACTLY like the single player games, and they do not exactly follow all the single player lore to a tee. That's OK though, your living in a Dragon Break where everything is possible. Enjoy it!
Most Direct Evidence ESO is a Dragon Break
"It's good to see you again. And I do see you, in my own way.
You are a wound in time, a tear in reality that shouldn't exist and cannot long endure." - The Prophet
This quote pretty much sums it up.The Prophet says you are a "wound in time" This is how a Dragon Break is described, when you break the dragon. The small dragon break that occurred when Alduin was banished was known by a similar name (Time-Wound)
How did this event happen
The ritual attempt that Varen Aquilarios thought he could use Chim-El Adabal(Amulet of Kings) to re-light the Dragonfires and make him Dragonborn did far more then just break the covenant with Akatosh and lower the barriers between Nirn and Oblivion.
It also Sundered and broke time. Thanks to Mannimacro and his vile schemes. Of course Mannimacro had ulterior motives, he wanted to be a good, and he knows a Dragon Break is his best opportunity to become one, and he finally succeeds with his 2nd Dragon Break in the events of the TES2: Daggerfall where he becomes the God of the Necromancer, and the Necromancer Moon appears in the sky.
The Elder Scrolls named this event the Soulburst.
It gave Molag Bal the opportunity to disconnect the souls of Nirn from their hosts." - The Prophet
"Erase the Upstart Talos from the mythic. His presence fortifies the Wheel of the Convention,
and binds our souls to this plane." _
MK Commentaries on Talos
In essence the use of the Amulet literally SHATTERED the Wheel of Contention and temporarily destroyed what keeps the Time-God linear. (this is why Herma Mora is able to draw books from the future into this timeline, because Time is broken)Also Many contradictions are quite common during Dragon Breaks.
Why Don't I see any of this stuff in game?
Because your not paying attention.

When Dragon Breaks happen,
many Timelines are made, many of the same people are made, many of the protagonists are made, etc. This is seen clearly in TES2: Daggerfall where all 6 different endings are reconciled and become reality. the best example is Mannimacro, he only becomes a God in one of the 6 endings, but because he succeeds in one possible outcome, he remains a God in all of them. (Hence the Shade of Reverent as seen in Oblivion)
Contradictions
"Wounded and devastated, Jorunn barely escaped the sack of Windhelm alive. Feeling for the first time the responsibility of his royal birth, he decided to appeal to the Greybeards for aid, and so made his way, stealthily but quickly, to High Hrothgar. For reasons that have not been divulged, the Greybeards summoned a hero from Sovngarde, Wulfharth the Ash-King, to fight at Jorunn's side." - Jorunn the Skald-King - Helgreir Lute-Voice, Bard of Windhelm
"Wulfharth goes underground to wait and strengthen and reform his body anew. Oddly enough, it is Almalexia who disturbs his rest, summoning the Underking to fight alongside the Tribunal against Ada'Soom Dir-Kamal, the Akaviri demon." - Underking, Ysmir Kingmaker
As you can see, these two accounts contradict each other. Jorunn-The Skald King was written in a time where the actions could actually be confirmed by others because as the invasion takes place only 10 years prior to the events of ESO BUT
The Arcturian Heresy were accounts written by Ysmir Wulfharth himself.
so which account is true?
BOTH if ESO takes place during a Dragon Break(which there is tons of in-game evidence in ESO that it does)
Lack of Info
All Dragon Breaks always have a lack of info. the Warp in the West for example, there are parts missing, no one knows exactly how all the events happened.
"Since Your Lordship was in Black Marsh serving in the staff of Admiral Sosorius at the time, you probably know of these events only from Imperial proclamations and Chapel declarations, which identify this period as the 'Miracle of Peace'. During the 'Miracle of Peace', according to official accounts, the formerly war-wracked Iliac Bay region was transformed overnight from a patchwork of squabbling duchies and petty kingdoms into the peaceful modern counties of Hammerfell, Sentinel, Wayrest, and Orsinium. The 'Miracle of Peace', also known as the 'The Warp in the West', is celebrated as the product of the miraculous interventions of Stendarr, Mara, and Akatosh to transform this troublesome region into peaceful, well-governed Imperial counties. The catastrophic destruction of landscape and property and the large loss of life attending upon this miracle is understood to have been 'tragic, and beyond mortal comprehension.'
In as much as this account confirms and validates the current borders of these counties, and identifies the rulers and boundaries of these counties as 'ordained by the Nine', the 'Miracle of Peace' serves Imperial objectives of peaceful consolidation of ancient petty states and sovereigns into manageable Imperial jurisdictions. The other remarkable features of these events -- mass disappearances, armies mysteriously transported hundreds of miles or completely annihilated, titanic storms and celestial phenomena, apparent local discontinuities of time -- fit comfortably into the notion that these events are part of a vast, mysterious divine intervention. "
The Warp in the West
Everyone knows The Interregnum had a lot lost to history, but this little nugget is very interesting:
Welcome to New Aldmeri IrregularsThen came the Dragon Break. That catastrophe was entirely the fault of Men, but the Altmer had to repair it.
Now the Men of the Empire have catastrophically blundered again, and all Nirn is threatened - Aicantar of Shimmerene
Aicanter is confirming
two Dragon Breaks here, the one mentioned in the book "where were you when the Dragon Broke"(which began after a fanatical sect of the Alessian Order known as the Marukhati Selective attempted to remove specific aspects of Akatosh") and another Dragon Break that occurred with "the Soul Burst"
Other inconsistencies and contradictions that can only occur during a Dragon Break
1. There are 6 different Emperors all ruling over a united Cyrodiil at the same time during the events of the Soul Burst(There were 6 campaigns at game launch all with different Emps ruling nearly uncontested over the same province at the same time...All the ring keeps on each campaign being owned by someone else militarily, yet all were ruling over the same province, all sitting on the same Ruby Throne at the same exact time)
2. I know someone is going to mention that the Blue Star Mnemoli is not present in the sky during this Dragon Break, and thats easily explainable. The standard Dragon Break preceps do not apply because even the "The Stars" are messed up due to The Soul Burst being more then a standard Dragon Break due to the barriers being gone.
This is CLEARLY seen in the events of Craglorn as the Celestials literally FALL from the sky,
their entire Constellations vanish from the skies completely. This could only happen during a Dragon Break where the impossible becomes possible.
3. Mutiple "version" of you complete the same tasks or deeds for the same people hundreds of different ways. Each version of you does it in a "contradictory manner" to ensure that all possible outcomes are made possible...this is Dragon Break 101....it doesn't get any plainer then this.
Conclusion
Simply put, Chill and enjoy the game for what it is. A Dragon Break DOES NOT de-canonize the events, on the contrary a Dragon Break makes every events canon. The as a whole makes far more sense when looked at from this view point. Mortals or senitent beings in Tamriel may not remember or have any knowledge of the events that occured during this Dragon Break, but they still occured....its the way the universe makes sense out all the contradictions that would make the flow of time impossible without reconciling them in some manner. Mannimarco knew exactly what he was doing, The Soul Burst was just a "side effect" of him wanting to create a Dragon Break because he wanted to become a God, the only way he could absorb Molag Bal power is if he broke time and removed the barriers, so he could literlaly absorb his essence...he failed this time, but he later succeeds in the 3rd era during TES2 Daggerfall.
The Vestige is merely a Soul Shriven Daedra with the spirit of a man/mer and will eventually fade back to Oblivion forever once Talos Re-lights the Dragonfires in the Imperial City with the Amulet of Kings. Until then, any reality is possible. So please just enjoy the game and stop nit picking, multiple possible outcomes all being correct is what makes a Dragon break so great.,
I am personally glad we get to expereince playing one game in the series that does take place during a Dragon Break to see how the world actually works during such an event. Many of us don't realize how lucky we are to see such an event first hand.