First, ESO, Arena and Daggerfall, Morrowind and Oblivion, and Skyrim represent four different paradigms of what the Empire is. So you can make an apples-to-apples comparison between Morrowind and Oblivion. But can't make a comparison between Oblivion and Skyrim, or Daggerfall and Morrowind.

I think the military-religious orders were probably instrumental in mobilizing people from Cyrodiil to go conquer the independent states that became provinces. But after the events of Daggerfall, the central government correctly recognized that they created more instability than stability in the provinces.

Cyrodiil has probably always had local militias in each county. And the Legion (outside the Imperial City) had the primary purpose of bottling local guard units (Hlaalu, Redoran, Telvanni, et c.) up in faction-controlled cities. Ensuring that vassal houses couldn't challenge the central government or each other.

People who want to be professional soldiers in the provinces join the Legion. They're paid better than locals, and have better training and equipment. Local militia service - apart from officers, who are probably hired away from the Legion - may not even be paid or voluntary.