However, his army is missing some very important elements-
Cavalry. A key player. Something Dagon lacked, but the Empire (canon) has. Possibly the most important part of the army.
Navy. We never saw any of the seas, but he must have had a Navy. If he was truly conquering Mundus, his forces would have been everywhere, not just Tamriel. Akavir would have been invaded as well. (unless he was to capture Tamriel first, lest the white gold tower stop his advance)
I noticed the same thing with Jyggalag. He's lacking a cavalry.
I don't think we were shown and accurate representation of Dagon's armies.
And what do you think Dremora cavalry would be like?