The vampires of Cyrodiil overtook the others. Because they could hide amongst humans, they survived while all the other clans of Cyrodiil were wiped out. The same has happened to the other provinces in the two hundred years since the Oblivion Crisis.
The Volkihar still survive in Skyrim and Vampires have been "Wiped out" before. Cyrodiilic Vampires are better at escaping detection but that doesn't mean that the other Vampire clans were "wiped out" and are extinct. Your explanation(source btw) and Bethesda's decision to go back to Oblivion's boring form of Vampirism is pure laziness in my opinion.
I think this is an acceptable case of game-story segregation. However I think it would be awesome if the NPC vampires and werewolves were immortal unless specific weapons like silver, fire, decapitations or sunlight were used. I liked needing to use silver weapons on enemies like ghosts. It made sense to me in terms of the game's lore and added an extra bit of planning and preparation to the gameplay (at least imo).
I do agree about the physical changes aspect though.
It is not acceptable considering that the story elements would make the gameplay ten times more enjoyable and
especially since they didn't have this problem in the past. In the past Vamps and Weres WERE
resistant to normal weapons and all the weaknesses in TES lore applied.
They haven't forgotten it. They made sure to put in books carefully detailing it all over the place. So that those players who make the effort to sit down and actually read all of it can better appreciate how completely they are ignoring their own rules.

Clearly.