http://www.uesp.net/wiki/Lore:The_Warp_in_the_West_%28event%29

Because this article served to only further confound my understanding of it.

Basically:

All endings in Daggerfall happened at the same time; causing a Dragonbreak with the help of the Divines. Everyone got the Numidium, used it to smack around the others, and here we are.

You should probably ask/search in the Lore forum.

But to expand on what Arclath said: do you know what a Dragon Break is? It has to do with Akatosh, the Dragon Time God, and when it happens, time becomes non-linear. Minutes can last for years and years can happen in minutes; past and future lose their meaning, things happen can all at once; multiple alternative realities exist at the same time and when the Break is over, everything that happened is true, even if the events are mutually exclusive. Time is warped, folded, multi-layered - extremely difficult to record, that's why no one ever remembers what was really going on.

Warp in the West was a Dragon Break. Daggerfall had 6 possible endings and WitW made them all true - all warring factions did take control of the Numidium and used it in their own way. Gortwog created Orsinium, Mannimarco made himself a god, High Rock and Hammerfell were annexed by the Empire.

For a more advanced and long-winded explanation, but it should (I hope) be understandable even if you're not highly steeped in the lore of the series:




It all began with the Dwemer, incorrectly known as the Dwarves. They attempted to ascend to divnity through the use of the heart of the dead creator god Lorkhan, using it to power a construct known as the Numidium. Their attempt apparently failed, however; absorbed into it, they all disappeared and "only" succeeded in creating an artifact and weapon of great power. This artifact was then taken by the ones who had fought the Dwemer to try and stop them from ascending, three Dunmer leaders known as the Tribunal, who used the heart of Lorkhan directly to become divine without needing the Numidium themselves. Thus, when (centuries later), they needed to make a deal with the up-and-coming Tiber Septim, they handed him the Numidium (or, in other sources, told him where to find its parts) to preserve some of their autonomy.

There was one problem for its new owner, however: it came without its power source, the Heart, and so Tiber needed to find another one. This is where it starts to get complicated: not just any power source would do; it had to come from a betrayal well-calculated to resemble that of the betrayal that had killed Lorkhan at the creation of the world, and the betrayal of a person who represented Lorkhan in some other way (a shezarrine, from the Cyrodiilic name for Lorkhan), thus giving the source the same sort of mythic resonance the Heart did. He did so in a cruelly pragmatic manner, stealing the soul of someone (either his Battlemage Zurin Arctus, or the ancient hero Wulfharth, depending on who you ask) in a great soul gem known as the Mantella. To control it, Tiber used another artifact, a stone called the Totem. With its aid he conquered Tamriel and became the first of the Septim emperors. However, the Numidium was destroyed at the height of his victory, the Mantella lost to Aetherius and the pieces scattered across Tamriel.

Over the next four hundred years, Tiber's successors as Emperor of Tamriel used the Blades to reassemble the parts of Numidium. Once this was done, however, the Emperor by that time, Uriel VII, still needed the Totem and the Mantella. Upon discovering that the former was floating around the Iliac Bay, he first tried to send a message to a loyal ally in the region, King Lysandus, through his equally-loyal wife Queen Mynisera, but between the sending and its arrival, Lysandus was killed and the letter got sent to the wrong queen. So, Uriel sent a personal friend of his as his agent to try and help the Blades commander in the region, Brisienna Magnessen, destroy the letter before someone else finds out where the Totem is and possibly uses it against him. The trick is, Lysandus' mother, Nulfaga, apparently knows where the Mantella is - thus, once the letter is found, everything can be brought together. Unfortunately, the letter has already made its rounds and now all the powers in the region know the Totem, and thus the Numidium's power, is up for grabs. Worse, the Totem isn't where it's supposed to be - so, instead of Lady Brisienna grabbing it for the Emperor (she had led an assault on the place it was supposed to be), said friend/agent gets it and immediately receives offers from every power in the area for it, while Nulfaga calls them to her to learn where the Mantella is to retrieve it.

This is the combination we have then: The Numidium and the Mantella represent the very power of creation, when time itself had yet to settle down into the proper order of cause-and-effect and set speed of later ages. The agent is faced with a choice, and it's a huge one - whoever has the Totem when the Mantella is brought back from Aetherius can, to a small extent, rewrite reality to fit their wishes, so long as they have some power or connection to Tiber Septim that allows them to maintain control over it. So, the agent goes to Aetherius, gets the Mantella, and when that happens, the rewriting happens immediately - but, simply because of that choice was available and all this mystic and divine power is floating around, ALL OF THEM HAPPEN AT ONCE. Obviously, this is very bad for the fabric of reality, and for two whole days (according to the time of the unaffected areas) it tears apart in the Iliac Bay region, only then being repaired by the God of Time, Akatosh - this is the Warp in the West. Said repairs essentially result in a compromise where almost everyone gets at least part of what they want: the rulers of Daggerfall, Sentinel and Wayrest expand considerably, the Emperor increases his control over the provinces, Gortwog gains acceptance for the Orcs, the King of Worms (possibly) ascends as a god of necromancy, and the one whose soul had been stolen, now known as the Underking, regains it from the Mantella and is finally allowed to truly die (the agent, who was unable to use Numidium's power, either got nothing or was killed by it, that part isn't known). Numidium is destroyed again, it no longer has a power source, and everyone (but the agent and the Underking, and those nameless people killed in the Warp's chaos) lives happily ever after.

Another tidbit is that there was a separate Dragon Break when Tiber Septim activated the Numidium for his conquest of Tamriel, down in Elsweyr (Rimmen?). Apparently that Break was even worse than the Warp in the West. In addition to the general chaos such an event could cause, a "version" of the Numidium continued to lay siege to the Altmer of Summerset Isle until sometime in the 4th Era, even though they were conquered within minutes at the end of the 2nd Era.