So I recently started playing Daggerfall and noticed that the Kajhiit race are humans who are apparently distantly related to the Cat people. The same description is given in Arena. So my question is who are these people under the name Kajhiit in the first two Elderscrolls games, or are they just disregarded from Morrowind and on?

Khajiit are born in a wide variety of forms, with the form they are born as determined by the phases of the moons. The ones in Arena and Daggerfall are probably Ohmes or Ohmes-Raht.

There is a wide variety of khajjits. There are even giant ones that can be used has mounts.

They've also been implied to be a form of Elf transformed, like the Chimer into Dunmer.