Since I plan to talk about The Elder Scrolls franchise quite a bit on this blog, it would be useful for me to start with the way I interpret the lore in the first place. To begin with, what is "canon?"
Only the actual events depicted in official materials should ever be considered canon. The game's lore books are subject to the unreliable narrator. Works like C0DA are not official, and the fact that elements of these works have been incorporated into the games does not change that fact. Only events witnessed by the player (or the reader, in the case of the novels) can be considered factually true, with all other sources being fair game for debate or dismissal.
The games do not and cannot depict Tamriel's true size.
TES II: Daggerfall has a relatively small part of High Rock and Hammerfell scaled to be just a bit larger than England. TES V: Skyrim depicts the titular province at a size roughly comparable to Gotham City in "Batman: Arkham Knight." You only need to look at a map from any of the games to realize that this scaling is just a little bit inconsistent. Conservative estimates based on measurements provided in-game put Tamriel's minimum size at about the same size as India; other estimates place its upper range at, and I quote, "bigger than Africa" in square mileage. So yeah, while the scaling may be inconsistent, Tamriel is definitely larger than a bread basket, and so on-screen scaling has to be taken with a grain of salt.
Bethesda sucks at writing stories.
They are in the business of making sandboxes. Damn good sandboxes, if you ask me, but sandboxes all the same. Stories can and do get bent and twisted to accommodate the sandbox experience, and their quality tends to suffer as a result. For this reason, in many communities 99% of efforts to interpret the lore of the series is just people explaining away the inconsistencies between how the lore books say things should be, and the way on-screen events say things actually are. The most glaring example being how Cyrodiil is supposed to be mostly jungle, but in all in-game depictions is shown the be a more temperate forested province. This was explained by Tiber Septim achieving CHIM and retroactively changing the landscape and climate. Don't get me wrong, I think that's pretty badass: but the only reason that's even a thing is because Bethesda promised a jungle and was unable to deliver. Lore and canon change when the gameplay requires it, not the other way around.
With all of that said...
A lot of my own interpretation of Elder Scrolls lore will necessarily need to be prefaced as "headcanon" due to the inconsistencies, not to mention that The Elder Scrolls series doesn't have a Silmarillion to fall back on as a source of "absolute truth about life, the universe, and everything." And frankly, if you get your lore from any source other than the Unofficial Elder Scrolls Pages (UESP), you're probably hearing a bunch of headcanons and fanfiction anyway. All these terms you hear about like CHIM, amaranth, the godhead, Anu and Padomay: these are all from lore books. None of us actually know what these things are or how they work, and that's assuming our unreliable narrators aren't just high on skooma. So take what I say with a grain of salt; but then again, take everything that isn't canon with a grain of salt. No one has the whole picture. It's possible no one ever will.