However, the Daggerfall demo was just the intro dungeon where you end up after your shipwreck, and really was rather pointless as far as representing the complete game goes.
No it wasn't. There were two Daggerfall demos. The first was a dungeon crawl, but it was not Privateer's Hold (the opening dungeon). Instead, it was a much, much larger dungeon that came complete with a settlement on one of the levels which served as your home base. It was very similar to how Ultima Underworld was set up, actually.
The second demo took place on one of the islands in the game. You couldn't leave the island but all of the towns, dungeons, guilds, etc. that were available on that island were available to you. In other words, you basically had the complete gameplay experience, minus the main quest.