I have a basic understanding of the Warp of the West but I seem to be a bit lost. I understand that there are now only 4 big powers in the bay area now instead of 44, but:

1) Do the various other cities still exist, but as defeated vassals to Wayrest/Daggerfall/Orsinium/Sentinel? Or is it just a wasteland? Or are the cities
2) How about the rest of High Rock? Is it still made up of squabbling kingdoms? Farrun and Jehenna still exist?
3) How did Wayrest, Daggerfall, Orsinium and Sentinel all get super massive armies that could be found everywhere?

I'd say there are still cities and such, just incorporated in the 4 powers. A bunch of them were probably initially destroyed.

For the rest of High Rock, see the above point

The scale of Daggerfall was the most accurate depiction of land-mass:population. MW and OB is highly condensed.

so, if i'm right. there was heaps of kingdoms in highrock, until the miracle of peace (thats it's name right?) and most place were destroyed and\or merged with other kingdoms, so in the end there was only 5 major kingdoms?

Just the bay area. The rest of High Rock and Hammerfell are just like they were before the http://video.google.com/videoplay?docid=6827163268088648679#.