The Overlord only destroyed the Empire. Irollan and the Silver Cities were defeated by Markel, Grimheim was beaten by the Imperials (and not just the red ones operating under Kha-Beleth, but also the rebels led by Frida). Igg-Shail, one could say, helped the Overlord's plans until Railag conquered him. The rulers, yes, perished, but new ones took their place. Zehir, Faydaen, Railag, Wulfsten, Frida with Duncan – in my opinion, the states didn't lose anything with their arrival.

Irollan was attacked by Biara's demons, and then the Red Army of Isabel fought against Coldwell, incidentally killing many elves.
In the Silver Cities, a cult of demon worship developed, which caused a Schism. The demon worship of the mages led to the invasion of Arantir.
Frida didn't really fight the dwarves, just small garrisons, so they wouldn't interfere with the retreat.
The Overlord's plan was to weaken the dark elves as much as possible. In short, everything went according to the script with the mages: the introduction of a sect, infighting, which leads to destruction.
Remember the last video from Lords of the North, where Alaric spoke with the false Isabel. It becomes clear that Biara tricked everyone.

Could you elaborate on the "embodiment of Urgash"? I don't remember that.

Of course, in the game they didn't say it that way, but Kha-Beleth, in a way, represents the will of Urgash in Shi'o and in Ashan. That's why "embodiment."

Depending on what you consider legions. What you described are gameplay features. In fact, the legions of the alliance clashed with the legions of demons. And the demons were defeated. Perhaps this was part of the Overlord's plan, but he probably wouldn't have deployed small forces.

Yes, it was for show, so that these four would think that everything was settled. But they were still deceived.
Gameplay features should not contradict the features of the scenario. Otherwise, it will look stupid.