Examples of lesser House include House Sotha, that was slaughtered but to the last by Mehrunes Dagon, leaving Sotha Sil as its only survivor. On the razed ruins of the House's clanstead Dagon's worshippers built a shrine to their master, which still bears the name of Ald Sotha...
Another lesser House, which still exists, is Ra'athim, the House of Barenziah, Helseth and Morgiah. This House is but one subpart of House Hlaalu.
Large families, such as the Hlaalu Dren, or the Redoran Venym, are such lesser Houses.
The Telvanni don't really have a use for lesser Houses, though. There's no room for a level of power between the Great House and the individual.