[some back story on my modest contribution to the TES Lore]

[The idea of Dremora outcasts was loosely based on this description

Dremora Outcasts: The Dremora Outcasts were once loyal servants to the Daedric Gods, always heeding their master's every wim. But eventually the Daedric Gods become bored of their servants and send them away into Tamriel to be killed. After many centuries the Dremora eventually gain the trust of the people of Tamriel and are now accepted as friends to the world.

Source: https://steamcommunity.com/sharedfiles/filedetails/?id=147557227

Another reference is this dremora outcast from TES online: http://www.uesp.net/wiki/Online:Lyranth

]

It is unclear if Dremora Outcasts are 'fallen' Dremoras or hybrids born from Dremora fathers and human mothers, maybe both, but what is known is that they retain some of their Daedric essence... just enough to make themselves useful but not enough to be a threat to common folks of Tamriel.

After years of trying to blend in, their features have softened and become more human. They serve as healers, alchemists, sometimes join bands of necromancers or even become advisors in Daedric matters for the powers of Skyrim. I even encountered an outcast traveling around with a Vigilant of Stendaar, no doubt to help them detect Daedra worshippers.

Since they come from Oblivion, they carry within them traces of primordial energy. That energy is a powerful creative force, responsible for the creation of Nirn itself. Because this force is part of their very nature, contacts of Humans with Outcasts can often lead to unexpected results, which explains their guarded and sometimes solitary lives.

Those who can control that energy use it to repair limbs, cure diseases or extend life. However, direct physical contact with Outcasts in the midst of rage or passion can inflict deep changes on their victims. Males can turn into females. Females can grow genitals from both sexes. Excessive exposure can turn males or females into giggling bimbos. Repeated exposure can even turn someone into a full Succubus, a sex starved half human and half dremora.

With access to proper Daedric artefacts (Daedra's Heart for example), a Dremora outcast can revert some of these changes or even conjure them on demand. Unfortunately, these changes have limits. Long term transformations into a succubus or a bimbo can be eventually irreversible.