Hammerfell is ruled by an emporer from the city of Sentinel. But the rulers of the other cities have alot of power in there own city, so it's almost like a group of city-states in a commonwealth.
(EDIT)
Person12321 who posted just before I posted

, has got it pretty much right. There still seems to be alot of infighting going on between the different city's leaders. I could see a bloody civil war for control happening whenever the current emporer dies. The lore about the current situtation in Hammerfell is pretty vague, as if nothing importaint enough to write about has happened in the last 50 years or so.