Step beyond the fourth wall with me for a moment.
In pre-TFL times (of Myth's development), Bungie had a cycle in mind of 500 years Light, 500 years Dark. Jason Jones said as much in an interview, and much of it remains in the game as told in TFL. In that plan, Tireces arose 2,000 years before game time, turned dark and returned as Moagim, and then was defeated by Connacht 1,000 years before game time, who turned Dark and was defeated by Alric in the game. It's been growing progressively Darker for the past 500 years, Balor's been known to be about for at least 300 (recruiting the Myrkridia), and so on. In my opinion they should've stuck with this plan.
At some point during TFL or M2 development, it got changed to a 1,000 year cycle of Light followed by a 1,000 years cycle of Dark, for some unknown reason. This screwed a lot of things up: now, since Connacht is established as being 1,000 years ago, that means that the past 1,000 years have been Light (called the Wolf Age), and we're now entering a Dark era (the Sword Age)? So why did we win? And wait a minute, if Moagim brought forth the Myrkridia who dominated the Dark age before Connacht, and Connacht killed Moagim, but the Leveller always dies whenever he shows up... so... Moagim died 2,000 years ago and then was defeated by Balor 1,000 years ago? So they invented this notion of "Moagim Reborn" to explain that. And yet wait, even after this revision, Seven Crocodile Skull still thinks we're entering a Light age?
Long story short, the Myth timeline is fux0red and has been since long before Myth 3 was ever conceived, and we're hard pressed to put it together in any sane fashion. The method we used for the longest time was my "A/B" spirits theory of the cycle, "the Forrestine Cycle" as some people call it. It's detailed in this article here:
http://myth.bungie.org/legends/delusions/cycle.html
Basically, when a Leveller ushers in a Dark era he dies at the start but his side still wins, and he is reborn 1,000 years later, but then both he and the forced of the Dark are defeated. At the start of Light eras, a hero lives to be corrupted and a villain dies; at the start of a Dark era, everybody dies, hero and villain, and darkness reigns for a thousand years.
The other possibility besides this is we try to see if we can come up with a version of history that matches the original cycle Jason Jones described, but that seems even harder to do. And I like the grim conclusion that despite appearances, this era is still doomed.
BTW, I wasn't suggesting that Bahl'al took over Moagim's forces, per se, which would have included predominantly Myrkridia; rather, that Bahl'al was one of his Fallen Lords and a great (perhaps the original?) necromancer, and as such has been roving the lands for the past thousand years taking advantage of all the death abundant in a Dark era, raising for himself an undead army for Wyrd knows what purpose. Mjarin meanwhile, the other surviving Fallen, has been plotting and scheming and tricking the Light, probably in collaboration with Bahl'al, preparing for the inevitable return of their master Moagim - but secretly both want to off the other and 'inherit the throne' so to speak. Hell, perhaps Mjarin actually believes he really is the Leveller of this era, which could explain the confusion.
So, it was Mjarin and Bahl'al together who were able to resurrect Moagim in some sort of secret dark ritual, and likewise, the two surviving Fallen after Myth II will eventually resurrect Balor in 900-odd years. That could make for an interesting sequel. I should look into TFV and see what kind of plot they've got cooked up there....
