Daggerfall:Daggerfall Preview

The Daggerfall Preview was the first of three demos released in the months before Daggerfall's release, and first appeared in late 1995. It was distributed on preview CDs included with Game Magazines, though it was soon replaced by a second demo, which was perceived to be less buggy and a superior experience. These releases were followed by the rarer Betony Demo.

Features include an animated bestiary, character generator, dungeon demo, and examples of the SpellMaker, Item Maker, and Potion Maker. The dungeon crawling demonstration takes place in a dungeon called The Pit of Jagadha, and provides a pregenerated 16th level Spellsword character to play.

Notes
There are a number of notable differences between the demo and the final release:

The deities listed in character creation are Akatosh, Arkay, Mara, and Julianos from the final game, though they are joined by "Notorgo, the Messenger God", "Ephen, God of the Wild", and "The Bandit God" (Bajdit, who eventually became Baan Dar). More in-depth info on these gods could be found in various files from the beta demo:
The beta version of FACTION.TXT has some entries have been removed or changed in the full game:
Raen (#20), with the temple called The Conservatory of Raen (#80), and the associated knightly order The Knights of the Field (#81)
Notorgo (#23), with associated temple called The Temple of Notorgo (#86), and a knightly order under the name The Order of the Wings (#87)
The Bandit God (#28), Brotherhood of Bandit (#96), The Wharf Rats (#97)
Jeh Free (#30), The Society of Jeh (#100), The Encyclics (#101)
Vir Gyl (#31), The Communion of Vir (#102), The Tide (#103)
Q'Olwen (#32), The Sodality of Q'Olwen (#104), The Order of the Key (#105)
Ephen (#34), The Fellowship of Ephen (#300), The Wildlords (#109)
Xedoc of Oblivion (#977) (retail copy only)
The Agliostrics (#800), a Mages Guild subfaction
FALL.EXE has references to a few divines that were removed from the final product:
Raen: God of Agriculture
Notorgo: Messenger God
Shandar: God of War
Vigryl: God of the Sea
Q'Olwen (wisdom?)
Ephen: God of the Wild
FALL.EXE also has a number of knightly orders, some in reverence of certain figures, and these strings from the demo were kept in the final game:
Temple of Theodorus
Knights of Daggerfall
Order of Nyeraad
Gryphon Knights
Order of the Lance
Knights of the Isle
Border Knights
Crusaders
Dreadknights
Some additional info about the removed deities can be gathered from TEXT.RSC:
You will find that for the next forty-eight hours, Raen has blessed your navigational skill.
You will find that for the next forty-eight hours, Notorgo has lessened your chance of having unwanted encounters.
You will find that for the next forty-eight hours, Shandar has blessed your best weaponry skill.
You will find that for the next forty-eight hours, the Bandit God has blessed your best thieving skill.
You will find that for the next forty-eight hours, Jeh Free has blessed all your language skills. 
You will find that for the next forty-eight hours, Vir Jil has improved the weather on the Iliac Bay.
You will find that for the next forty-eight hours, Q'Olwen has blessed your lore skills.
You will find that for the next forty-eight hours, Ephen has blessed all your relations with animals, in combat or otherwise.
Several references in TEXT.RSC, apparently in bards' rhymes:
Shandar, excuse this bard's rude rhyme!
Shandar, let me tell this tale well
Ah by Shandar, was there ever such a scene?
Notorgo Altar (v213)

A document entitled REDGUARD.TXT provides early drafts of Redguard lorebooks, including the unreleased The Song of Divad.

The following books are present in the game files, though it is not known if they can be read within the demo:
The First Scroll of Bajdit
A Tale of Kieran
Fragment: On Artaeum
The Wild Elves
Redguards, History and Hero
Ark`ay The God
The Faerie
''Oelander's Hammer
The Pig Children
The Old Ways
King Edward, Parts I - X
Ghraewaj
A Scholar's Guide to Nymphs
The MemoryStone''