

It's not necessary to read that to play though. If you're using mods you're better off doing manual installs than using the Nexus mod manager. Just follow the instructions on the DL page or in the included. It's usually just extracting a single file to your mods folder. It's a game made by modders so is very mod friendly! DFU even auto resolves load order issues in its inbuilt mod manager.

If you're feeling especially manly you could just try the original game using Daggerfall Setup but I'd suggest starting with Unity. If you do want to play it though, there's an excellent guide to dungeoneering on Reddit which I think is required knowledge to even attempt a playthrough of classic Daggerfall. From there use the "levels" shader to adjust the black point to 18 and put the white point to max. Then use the "tonemap" shader to adjust the saturation to 700 and the exposure to 075. This isn't hard to do and is an absolutely crucial step in improving the look of retro rendering mode. You need to turn night ambient light and dungeon ambient light back to their default values once you do this (trust me nights will be dark enough). Here's how to install Reshade and add presets If for whatever reason you run into trouble doing that.

It's just installing a program and moving sliders so you can do it. The above settings would be a good start though. Later releases may have fixed the color palette issues.

The devs are aware of them and plan to have it sorted before 1.0 at the latest. If they're fixed you don't need Reshade (and most of this information will probably be out of date by then also as all these mods are WIP). My former mod list, now sitting in a folder because I like retro rendering better. This list gives a totally different and beautiful look to the game and runs well together. I'd say give it a try even if you prefer the old graphics (as I do) because an entire mod list can be dragged and dropped into DFU or just disabled/enabled with one click, and seeing Daggerfall look like this is really something else.
