Board Thread:Lore Discussion/@comment-7692923-20130508125416/@comment-6881629-20130508132056

They armor digivolved, no depending on what the phases of the moons are when a Khajiit is born it can range from looking like a house cat, a lion or very humanoid the full details are here.

I imagine Bethesda were playing about a bit too to see what was better, those legs in Morrowind look really awkward though.