Despite all their merits, dragonlings are less grand than their lineage would suggest. Explorers, sages, and archivists have argued for centuries over whether the great dragons of legend still live, if in fact they ever existed.
Important parts underlined. Now, combine this with what Skyrim says:
There are no known examples of dragon eggs or dragonlings. The Iliac Bay (Daggerfall) area has stories of such things, but so far all have proven false. The eggs turned out to be eggs of other reptiles. The small dragons were merely oversized lizards and no relation to true dragons.
Relevant to note, Daggerfall was going to have http://www.uesp.net/wiki/Daggerfall:Skakmat, fully modeled in 3D (there's a texture file in the game that's the skin for a dragon model), but he didn't make the cut... whether it was an actual cut, or if it was planned feature that simply never got completed, is unknown. Still, given the way TES lore works, there's nothing to say he couldn't have still existed. I also like how it mentions "Under Nulfaga's orders, it created a sudden unnatural fog at the Battle of Cryngaine Field which blinded the combatants"... totally something I could see a dragon do with its shouts.
Then why are there normal Dragons, Elder Dragons, and Ancient Dragons? Simple, some are older than the others. Which means that new ones are being born/created.
It could also refer to their standing among dragonkind. An "elder" is someone wise/powerful and revered, and an "ancient" even more so... with wisdom and reverence something we humans tend to attribute to age.
Or we can just say it's a mistake on Bethesda part. They needed names to differentiate a dragon being stronger than another, and they decided on "blood", "elder", and "ancient". Don't forget the "infinite dragons" was something added very late to the game. Even after the game was announced 11 months before release, they were unsure if they were going to have a set number of dragons, or if they'd continue to (re)spawn. It could be they were only going to have set dragon encounters and they'd all have unique names, but now since most of the respawn (and spawn randomly), they needed to remove the unique names and give them generic "Dragon" labels.