So I've just started my first ever Arena play through, and I've already been terrified. I was a lowly level 2 Bard, just out of the Imperial dungeon. It was suggested to me that I could find Fang Lair in Hammerfell so I fast traveled to a random town. When I got there it was nighttime, and the moons must have been in the shop for repair, because I could only see as far as my nose. Then, suddenly, out of the darkness, a giant green monster appears and attacks me! Ahh! What in Oblivion is this supposed to be?! I manage to slay it by myself (no guards in sight; they must be hunting vagrants in Daggerfall) I learn from it's corpse that it's called a "Lizard Man". Apparently they are thought to be related to Argonians, but are actually just monsters. Why haven't these appeared in any other TES game? They look cool enough, and I think there is some good lore here: what exactly is their relation to Argonians? Are they really mindless, or just misunderstood like the Orcs?

I vote misunderstood

That's what I'm inclined to suspect as well. After all, this is the same game that claims that Orcs are lager versions of Goblins, and only just smart enough to set up ambushes. The "scholars" of Tamriel tend to be a bit close minded.

indeed!

I'm guessing that the lizard men enemies became Daedroths in Daggerfall, and later on the Naga may have been inspired by Arena's lore on how people were linking a savage lizard man race to the Argonians. The lizard men in Arena are ax users just like the Daedroths in Daggerfall, the main difference being that the Daggerfall Daedroths did not use shields and wore armor and boots unlike all future appearances of Daedroths.

Arena's lore states that the lizard men aren't Argonians because there's nothing human in the lizard man race. Of course, it's debatable as to whether or not Argonians in Arena are really separate from the human races at all. Daggerfall was the first game in the series to fully separate Argonians from humans on at least the physical appearance aspect, although there wasn't much in the way of Argonian lore in that game and there are no beast race NPCs anywhere in Daggerfall.

Maybe. But there are other creatures in Arena that are explicitly stated to be from "the netherword"/oblivion, and the lizard man are not among them. Also, they can be hurt by normal waepons, while the deadroths of daggerfall and morrowind cant.

It's more likely the Daedroth was a continuation of Arena's Fire D?mons. As to Lizardmen, I'd not really given it much thought. I get the feeling they're Goblin-ken, with ties to Malacath, but that's pure speculation.

they don't look very goblinish. I think they are most likely A) distant offshoots of Argonians, who separated themselves from the hist long ago. (kind of like how giants come from mannish stock) or B.) Normal reptiles from Black Marsh that separately evolved intelligence. As for why they aren't appearing any more, perhaps they were being aided by Jagar Tharn in exchange for serving him, and after his fall the other races began to drive them into seclusion.