Remember Gortwog, the Orc-lord of Orsinium? His full name is Gortwog gro-Nagorm. It's the Orcish way of providing a patronymic (father's name); Nagorm was his pops. If Gortwog had a sister, she would've been gra-Nagorm.
Did you notice that all months are 30 days long in Daggerfall? This makes Tamrielic (Nirn's) year 360 days long.
Xan's note: The calendar in Arena's manual states differently. Morning Star has 31 days, Sun's Dawn has 28 days, First Seed has 31 days, Rain's Hand has 30 days, Second Seed has 31 days, Mid Year has 30 days, Sun's Height has 31 days, Last Seed has 31 days, Hearthfire has 30 days, Forstfall has 31 days, Sun's Dusk has 30 days, and finally Evening Star has 31 days. Total: 365 days. Perhaps due to the deadline, the Daggerfall calendar system was not fixed. Even Morrowind has problem with its calendar system. The year in Morrowind starts from Sun's Down not Morning Star as it should be. And it's never fixed by the patches. See this for more information about the calendar issue.
There's a series of 10 books called "The Real Barenziah" (available here). In the game, all books are called "The Real Barenziah, Part NN" except for Part VIII, which is "The True Barenziah". Scribe's mistake?
A similar snafu plagues the series about King Edward (available here). All parts are numbered with Latin numbers (I, III, IV, V, VI...) except for the second part, which is numbered with an Arabic number (2).
Many deities, heroes and Daedra Princes in Daggerfall were named after actual people, members of development and testing teams at Bethesda. With some of these, it can be figured out from the credits in the manual.
- Julianos was named after Julian LeFay himself;
- Stendarr - Daniel Starr (Dan Starr -> StenDarr, pretty obvious);
- Arkay - R. K. Deutsch;
- Mara - Marilyn Wasserman (confirmed, and she is the author of "The Real Barenziah" and "King Edward");
- Dibella - Mary Jo DiBella;
- Akatosh - this one's complicated. There was this beta-tester named Lawrence Szydlowski, which is obviously not a very good name for a generic fantasy setting of Daggerfall. His online nickname was Smaug, and it was not very good either, since Smaug is widely known. His sign-off, though, was Larry, "also known as the Old Smaug himself." That spells out A.K.A.T.O.S.H., so Akatosh became the name of the dragon god of time.
- Zenithar was based on a tester named Stephen Zepp.
- Kynareth - surprisingly enough, this name was not based on anyone's. Kynareth, however, was mentioned in TES: Arena. She was the spirit behind the artifact called Lord's Mail, and the dungeon where the Mail was to be found was Kynareth's crypt.
- Sheogorath, the Daedra of Madness, was the the alter ego or Tedders himself. Ted -> Theodore -> Sheogorath. We have a section, dedicated for him.
- Jone and Jode, the moons on Tamriel (Nirn) are testers Judy Weller and Joan McKeown. Joan and Judy = Jone and Jode.
In the middle of Daggerfall's TEXT.RSC file (it's the one that contains, among other things, all generic dialog messages) there is a very long piece of what looks like extremely bad poetry. It cannot be encountered anywhere in the game. Tedders told me that it was a remnant of another never implemented feature - bard songs. The idea was that when the PC went into the tavern, the bard would be singing a tune, composed of several distinct rhyme schemes -- maybe ABABABCC or something -- with phrases grabbed to rhyme.
See the whole list of poetic lines here. But be warned, it's a long read.