I offer you the condensed version of an interview with Matt Firor, Game Director of TESO, who talks about the background of the game and its links with the other Elder Scrolls, interview which was carried out by Venturebeat.
For fans, the Elder Scrolls series is legendary in many ways, but what struck players the most is certainly its very rich and rich background. Over the titles, a real world has been set up, with its mythologies, its history and its society.
The Elder Srolls Online will continue in the same vein, bringing its "little" stone to the building.
The game still takes place in Tamriel, where players will be able to explore well-known territories, such as Morrowind or Cyrodiil, but also lands that no one has ever seen, in the southwest of the continent. To give a little time reference, TESO takes place 800 years before Oblivion and 1000 years before Skyrim.
Veteran players will be delighted to find all kinds of well-known creatures they may have encountered in other Elder Scrolls, be it Arena, Daggerfall, Morrowind, or the newer Oblivion and Skyrim. But no dragons though (just one).
The player will begin the adventure by having their soul stolen by a Daedric prince, Molag Bal, and will want to get it back. His main quest will therefore be to investigate and find the prince to recover his soul, and incidentally to save the world. A "secondary" occupation, especially if he joins the Warriors Guild, will be to destroy Anchors that Molag Bal launches throughout Tamriel, in order to bring this world into his Daedric plan.