For most of their history, the khajiit haven’t really troubled the minds of outsiders, even with their nearly constant insurrection and tribal warfare, according to the Pocket Guide to the Empire, 1st Edition. According to the 3rd Edition, however, in the early First Era, there were sixteen independent realms in Elsweyr. Unlike typical human and elvish kingdoms, these regions did not compete with one another for land and power. Recognizing their own idiosyncratic characters and strengths, each territory specialized in one specific duty, supplying its neighbors with its bounty in exchange for equal measure. It was said that when both moons were full, Ne Quin-al was in dominance; when both moons were half, Torval; when both moons were new, Senchal. The other regions too had their days of power and influence.
For a thousand years this delicate astronomic and political dance was equal to facing every threat posed against the Khajiit. The Alessian Empire chose not to extend its borders too far south, and the Bosmer of Valenwood likewise knew how far eastward they dared to extend their kingdom. But the terrible Thrassian Plague of 1E 2260 finally upset this balance forever. Travelling down the trade routes into the heart of Elsweyr, the plague decimated the Khajiit, forcing the survivors into roles they did not choose. Thus was the province turned from sixteen states to only two: Pa'alatiin and Ne Quin-al, more commonly known by their Cyrodilic names of Pellitine and Anequina.
The two kingdoms represented radically different interpretations of Khajiit culture, which they adopted from the tribes each had absorbed. The people of Pellitine considered their neighbors in Anequina to be uncouth barbarians, while the Anequinians looked to the south, and saw only decadence and depravity. For many more centuries, the two lands fought, neither gaining appreciable ground. The South had the wealth and could hire mercenaries and withstand sieges, but the North had a warrior culture, and could never be dominated.
The old kingdom of Anequina (the northern section of Elsweyr) has historically offered no threat to either the early Cyro-Nords or the later Cyrodilic Empires. Pelinal Whitestrake mistook the khajiit of Anequina for another strain of Aldmeri and killed many of their number before realizing his error.
However, the Elsweyr Confederacy was established in the Second Era (2E 309), when Keirgo of Anequina and Eshita of Pelletine combined their long-feuding kingdoms. This union sparked a great class struggle that briefly threatened to draw in outside intervention. Each kingdom had its own central government and allied tribes, but this power shifted upon the creation of the Confederacy into a nobility “besieged by those tribes,” who felt that both their ruling classes had betrayed them. Chieftains forgot their ancient sugar-vendettas and signed treaties of their own (recorded, incidentally, through facial tattoos), and before long the cities of former Anequina were under constant attack. Keirgo attempted to get help from the Empire, but to no avail (since the Empire was in similar disarray due to the loss of Potentate Versidue-Shaie). The conflict reached its climax when Ne Quin-al had fallen to the rebels.
Against all odds, peace was restored when the Mane Rid-T’har-ri’Datta “bestowed to the classes equality under the bi-lunar shadow, dividing their power in accordance with two-moons-dance of the ja-K'hanay”. This established a rotational power base in which both sides of khajiit society (the city-dwellers under the nobility and the nomadic tribes of the desert chieftains) shared alternate control of the region based on the phases of Masser and Secunda, which was overseen by the Mane himself. Since then, Elsweyr has withdrew itself into a secrecy that has scarcely been breached in five hundred years.
In 2E 560, a strain of the Knahaten Flu blew across the channel from nearby Argonia and quickly infected the population of the city of Senchal. Whole neighborhoods were razed in some mad effort to cleanse Senchal of the Flu and have never been rebuilt.
Sometime during the Interregnum, Akaviri refugees had fled persecution when the warlord Attrebus briefly aspired to the Imperial Throne. Attrebus, though he lasted no longer than most of the pretender kings of that period, thought he might rid Cyrodiil of the foreigners who had ruled it for the first half of the Second Era, and he drove the Akaviris past the Empire's borders into Elsweyr. The khajiit granted them asylum in northwestern Elsweyr, where they dwelt in relative seclusion until remnants of the Dir-Kamal resurfaced in Cyrodiil, seizing the Throne from Attrebus' successors. The Rimmen (literally, the "Rim Men," as the khajiit called them) joined their brothers to try to rebuild the Empire. This effort was doomed to failure, but not before the khajiit attempted to reclaim their lands in a series of bloody border wars. In 2E 812, still during the Interregnum, Elsweyr had lost territory with the secession of the rim territories. In the time period around 2E 864, since the ascension of Tiber Septim, the hapless Rimmen have once again submitted to the protection of the Mane, with a renewed tribute paying for the Mane's guarantee of their independence.
In 2E 864 (contemporary with the publication of PGE1), there had been rumors that the Elsweyr Confederacy had recently struck a treaty with the Aldmeri Dominion. If true, this could lead Elsweyr into a bloody conflict with the Cyrodilic Empire.
Despite the Mane Rid-T’har-ri’Datta’s new system of class equality following the infamous class war, the following centuries into and including the Third Era have been times of intermittent strife among the Khajiit of Elsweyr. Successive Manes occasionally brought tenuous peace to the land, but never for long. The Khajiit have found security in being absorbed into the Cyrodilic and then the Septim Empires, only to rebel against both. They have sought solace in their rich literary tradition, finding the tales of Rajhin the Thief to speak to their people, but they have stopped the flow of books into their land, for fear of Imperial propaganda. They have tried to enrich their pockets with drug-trafficking, only to enslave their minds to moonsugar. They have engaged in wars with Valenwood on grounds that have constantly shifted, like the sands of Elsweyr itself.
The Five Year War with Valenwood shifted the borders of Elsweyr slightly west, taking both banks of the Xylo River. At the end of the Imperial Simulacrum, a diplomatic attempt was made to return the land to Valenwood, but the Khajiit settlers who had already claimed the land refused to move. The Empire eventually found that it was best to leave the situation as it was, possibly persuaded by legal proof that the land rightly belonged to the Khajiit by ancient treaty, and to keep a dangerous situation from getting worse.
Elsweyr's overall territory, however, has not increased, due to a border arrangement which was not in that nation's favor. In the east, the long disputed border with the Cyrodilic County Leyawiin was recently resolved in Cyrodiil's favor, after an agreement between the current Mane and the Count of Leyawiin. But a group of Khajiit bandits known as the Renrijra Krin has taken up the cause of returning the land to Elsweyr, and the West Niben remains a trouble spot.