If Arena is the primordial soup, then Daggerfall is the pre-Cambrian explosion. You can tell they’re related, but bloody hell, the difference is astonishing. While Daggerfall is quite clearly the successor to Arena, it is also incredible leaps and bounds ahead of it — far more than the two year gap between the two games has any right to.
I don’t really know what to say about Daggerfall, though. While it is an incredible feat of strength, it is also a fairly poor and frequently broken game.