You remember those pesky little yellow creatures with war-axes in Arena? Scampering around making their little war-cry? "Yurelaiuh!"

Whatever happened to them? They disappeared during the events of Daggerfall... reappeared during the Oblivion Crisis, and then disappeared again after that.

What are they? And why do they appear so intermittently?

They appeared in Tribunal, too, and the Rieklings are probably relatives of theirs.

A lot of people like the idea that they're degenerated elves; the Cyrodiilic goblins being fallen Ayleids, the Rieklings being fallen Snow Elves (though the latter doesn't work well at all, with Skyrim, what with the Betrayed Falmer). Something to do with Mer without Towers.

Me, I take them as one of Tamriel's many 'beast' races, outside of the Man/Mer dynamic. If they are Merrish at all, I'd say that they're closer to the Orcs than anything else. They definitely have some sort of kinship, what with the inclusion of goblins in Orsinium, and their similar situations before the Orcs were accepted as people rather than animals.

I always figured Goblins were associated with Malacath.

I'm not sure I buy the Elf degeneracy thing. It doesn't add up with the Ayleids. The time distance does not add up more specifically, as the Altmer had Goblin slaves while the Ayleids were at their prime.

http://editorialinitiative.tk/this-many-goblins-left-cave.html