If they're just collecting dust (and items because I needed mules), I generally repurpose them once I can fix the space; IE, I just delete the character and start fresh. But when I go to create a character, I often go for some kind of idea on what I want them to do already (often I'll make mockups of characters during PTS cycles and test with the templates). If they're characters that have gotten really unlucky and have gotten the other end of the nerfhammer, I often just hold off on making super big decisions until the next balancing patch on the PTS.

Let's see. Since I'm not ESO+ anymore, most of my characters are used for storage of one kind or another. One has the monster masks. One has x50 transmutation geodes from PvP. One has armor sets that didn't fit into home storage. One is my chef and carries all the provisioning materials. One is my crafter and carries all the trait / style gems. The rest of the materials are in the bank.

I take every character into Cyrodiil once a month and gather / leech 25K AP for the x50 transmutation geodes.

As far as my Nord DK, she is currently my second main. Great character. I struggled for a long time to understand DK and play it properly. What makes it work for me are these things:

(a) Use Take Flight. Fantastic ulti for PvP. Probably not the most effective for high-end PvE, but still a lot of fun.

(b) Use DOTs. Venomous Claw is better than it looks. Noxious Breath is indispensible for the armor debuff and as an AOE (area of effect) attack.

(c) Use 1-hand + shield on your back bar. DK has a blocking passive. 1H+S synergises with that. This is DKs strength. You want to take advantage of that tankiness and it synergises with Nord too. If you only play easy stuff, a bow would probably enable more damage. For harder solo play and PvP I recommend 1H+S. I prefer medium armor by the way. 1H+S turned out the important thing, not wearing heavy armor.

(d) Wear Bloodspawn. The jury is out for next patch, but the Nord's ulti gen + Bloodspawn improves your sustain via ultimate use. Can't really beat it on DK.

In addition Stone Giant works for me. Everyone uses Dizzying Swing in PvP, but Stone Giant + DOTs hits pretty hard and it's got an AOE and ranged component, which plays quite well.

I have two short clips. Don't mind the two downvotes on the vMA clip. There are people who get insane 600K+ scores in vMA and will nuke that boss much faster. For me on the other hand that was fast. About as fast or faster than on my other characters. I really like DK in vMA, because you DOT up the boss and make progress on them, while dealing with adds in the meantime. In this case, though, I opted to simply burn the boss:

https://www.youtube.com/watch?v=0fc9ZbDiO2w

https://www.youtube.com/watch?v=Kk8zOgiB1ds

This is the build: https://en.uesp.net/wiki/Special:EsoBuildData?id=230513

You want to take advantage of the Minor Brutality passive on DK, which I cover by using Stone Giant in my build. This left me free to dispense with Fragmented Shield (which every other PvPer uses) and use Race Against Time as a magicka dump instead. I'm wearing Shacklebreaker for mag sustain, since I like that speed skill a lot.

Your heals include Rally, Vigor and Cauterize. Can't really recommend that last skill enough. Having healing skills of different duration works well. Keep Cauterize up at all times. Can't get away from 2H for Rally, by the way.

In PvP Leap + Executioner is your opportunistic kill combo. Since we have Stone Giant and Noxious Breath for AOE already, I do recommend the Executioner morph.

As you can see, this build works well for both solo PvE (vMA) and PvP. It's also tuned for quite a lot of sustain, thus works in no CP unchanged.

Of course a Nord DK would also make an excellent tank. Completely different attribute, skill and gear layout. Not something I'm an expert on, so I'll refrain from saying more.

I have to confess I'm also a little bit of a role-player. This makes it hard for me to delete characters or change their appearance. My magplar is the go to character for PvE farming. My sorc is her younger twin sister. I couldn't possibly delete her. I couldn't do that to my magplar. Then there is a character called "Your Ex-Girlfriend". That one has some role-playing history for obvious reasons. In fact, my parkour house was inspired by her (skip to the end, if you only want to know why):

https://www.youtube.com/watch?v=jL_RIdK0auY

There's also the investment into horse riding, Undaunted, skyshards, Mage's Guild, Psijic and so on. I wouldn't really delete a character that has even half of those things, lest they become useful one day.