This really just hit me, and perhaps I didn't pay enough attention to the MW main quest (at least, the parts i did), but I've never totally gotten this. I know that Dagoth Ur is the leader of House Dagoth, the fallen 6th house of Vvardenfell, and is trying to use the heart of some dwemery thing to become a god like Vivec did. But there are a few things I still don't get... Dagoth is the 6th house... who is house 4 and 5? I can think of great house Redoran, Hlallu, and Telvani, but thats all that comes to mind. Are houses 4 and 5 fallen too? If so, did they disperse to other houses, or did they go to another province? Why is dagoth sill around?
That's actually not what was happening. You really didn't pay much attention, did you?
The heart was not the Dwemer's. They found it. It was Lorkhan's heart. He was a god. Dagoth Ur had already gained divinity from it, he was just hopping to use it to power a giant robot which he was to turn into a god and use to free Morrowind from the Imperials. That, and turn everyone nito evil Lovercraftian mutants.
Hlaalu, Redoran and Telvanni are the only three that one encounters in Vvardenfell. The other two are Indoril and Dres - the first being Nerevar's old House - which only have holdings on the mainland.
The Dwemer are also sometimes considered as a Great House. They were members of the First Council, too, after all. However, they're usually lumped in with House Dagoth.
And we also have houses minor too numerous to count.