At the opening of Elder Scrolls: Arena it was said that the Elvish name 'Tamriel' was eventually forgotten and all the people of the Empire had taken to calling their world 'Arena'. I've played through Morrowind and Oblivion, but never heard this mentioned to my knowledge, and Tamriel is used a lot.

Is this just retcon or is there actual spoiler-based events in earlier games to explain this?

Probably just retcon.

It was something to cover up the fact that Arena was originally going to be an arena game, but they made a decision after it had been named to make it open-world. It would have looked stupid to be called Arena and encompass an entire continent, so they changed the world's name to Arena.

From wikipedia:

Initially, Arena was not to be a classic RPG at all. The player, and a team of his fighters, would travel about a world fighting other teams in their arenas, until the player became "grand champion" in the world's capital, the Imperial City.^{http://en.wikipedia.org/wiki/The_Elder_Scrolls:_Arena#cite_note-ARBTS-4} Along the way, side quests of a more role-playing nature could be completed. As the process of development progressed, however, the tournaments became less important, and the side quests more so.^{http://en.wikipedia.org/wiki/The_Elder_Scrolls:_Arena#cite_note-TEDDERS-3} RPG elements were added to the game, as the game expanded to include the cities outside the arenas, and dungeons beyond the cities.^{http://en.wikipedia.org/wiki/The_Elder_Scrolls:_Arena#cite_note-ARBTS-4} Eventually, it was decided to drop the idea of tournaments altogether, and focus on quests and dungeons,^{http://en.wikipedia.org/wiki/The_Elder_Scrolls:_Arena#cite_note-TEDDERS-3} on making the game a "full-blown RPG".^{http://en.wikipedia.org/wiki/The_Elder_Scrolls:_Arena#cite_note-ARBTS-4} The original concept of arena-combat had never made it to the coding stage, and so few artifacts from that era of development remain: the game's title, and a text file with the names of fighting teams from every large city in Tamriel, and a brief introduction for them.^{http://en.wikipedia.org/wiki/The_Elder_Scrolls:_Arena#cite_note-6} The concept of traveling teams was eventually left aside as well, because the team's decision to produce a first-person RPG had made the system somewhat less fun.^{http://en.wikipedia.org/wiki/The_Elder_Scrolls:_Arena#cite_note-ARBTS-4}
Although the team had dropped arena-combat from the endgame, because all the material had already been printed up with the title, the game went to market as The Elder Scrolls: Arena. The team http://en.wikipedia.org/wiki/Retcon the idea that, because the Empire of Tamriel was so violent, it had been nicknamed the Arena. It was actually Bethesda's founder http://en.wikipedia.org/wiki/Christopher_Weaver who came up with the name of "The Elder Scrolls,""^{http://en.wikipedia.org/wiki/The_Elder_Scrolls:_Arena#cite_note-TEDDERS-3} the description of which eventually came to mean "Tamriel's mystical tomes of knowledge that told of its past, present, and future."^{http://en.wikipedia.org/wiki/The_Elder_Scrolls:_Arena#cite_note-ARBTS-4} The game's initial http://en.wikipedia.org/wiki/Voice-over was changed in response, beginning: "It has been foretold in the Elder Scrolls..."^{http://en.wikipedia.org/wiki/The_Elder_Scrolls:_Arena#cite_note-TEDDERS-3}

I like it being called Arena. "Tamriel" could as well be Faer?n, Hyrule, Melniboné, Númenor... but calling it the Arena evokes a certain something for me.

I can picture heroes and wizards and kings and monsters arrayed as if on a wargames table, with the spirits and demons hunched over it readying their dice and the poor Aedra holding up the board with varying degrees of patience.

Nirn (the planet) means "Arena" now, while Tamriel has been relegated to continent status.

I'll never understand how an arena game turned into an open world RPG. But anyway, I think it was called arena back then because Jagar Tharn was in charge, making things dangerous for everyone. When Uriel came back, I think he tried to stop people saying "arena" as it would imply his empire was weak.

I do recall in an interview, or maybe misinterpreting that earlier post, that by the time they got everything down, "The Elder Scrolls" was added last minute to the final cover for Arena.

Funny; in a weird twist, when some complaints say that TES is losing its RPG status, it originally was never an RPG. Whodathunkit

Why do you think your world has always been contested ground, the arena of powers and immortals? It is Tamriel, the realm of Change, brother to Madness, sister to Deceit.
Mankar Camoran in Oblivion.

For the same reason the Blizzard devs call the whole planet Azeroth when it used to be the name of a single kingdom.

Hmmm I thought "Mundus" translated to Arena in some language (probably Elven, or Ehlonfey)

It's Latin for "world" or "universe", which is what I'm assuming Bethesda got it from originally (back when TES wasn't a fully established universe and had a lot of generic elements).

And by calling something mundane, you're calling it worldly, realistic, non-fantastical. Etymology is fun.

And they only recently began to actually implement the Elder Scrolls into the games.

Well from what I understand, they were going to make it so you would be traveling around the continent to different arenas in different provinces to do battle. Then I suppose somewhere along the line somebody said "Well what if you you could walk around the town", and then "Well what if you can talk to the people in the town", and then that then leads to "Well then what if they actually give you quests, and you can go visit dungeons, and explore endless wilderness". And then it just keeps going from there until you have a completely different game that doesn't even have proper arenas in it!

And now in certain quasi-dimensional reverse-growth Eggs, multiples of people battle endlessly through aether-umbilicals in Arenas. Theirs are the battles of avatars and numbers made letters. Many are their names and more are their insults.