Theory: Vilverin served as a neutral ground for politics in Ayleid society

If the Ruin's size in Oblivion is accurate, then the area is much too small for a city strong enough to justify being an independent city state. It would be too small to be of population or economic significance, and had no major religious value of it's own that we know of, so that leaves politics. With how significant the Imperial City was to Ayleid society, it makes sense that they would have a seperate place set aside for purely neutral ground in politics, a place where Ayleid leaders could meet and negotiate without fear of ambush. With how close and sacred the Imperial City was, it would discourage treachery, and setting it up as small but independent would prevent it itself from taking action against any one leader.