The Empire had already lost three entire legions in the fighting over the capital, the first during the retreat, and two more during the Battle of the Red Ring to retake it. Those that remained had been badly savaged and reinforcement was not forthcoming. The White-Gold Concordat was agreed to because the Empire knew that continued fighting would only delay the inevitable, while the Aldmeri didn't want to expend the resources necessary to stomp the Empire flat when the proposed peace agreement was very generous to them.

As for Hammerfell, it's heavily hinted that the Aldmeri specifically asked for it because they knew that Mede would be forced to release it as an imperial province to maintain the treaty and that it would create resentment amongst the Redguard towards the Imperials. If the Empire had tried to hold onto it, then both likely would have fallen.

>I think Ulfric genuinely expected that his defeat of Torygg in single
>combat would be recognized as legitimate by all the Jarls of Skyrim
>and so he'd be a shoe-in for next High King. He didn't seem to realize
>that the Nords no longer live in the time of Ysgramor, and that even
>back then, an experienced warrior challenging and killing a much
>younger one without exhausting diplomatic options was considered bad
>form.

That's sort of the sentiment you get from Jarl Balgruuf, that the other Jarls who support the Empire may not agree with the Concordat or really overly happy with the increased Imperial presence to assist the Thalmor, but Ulfric's challenge and slaying of Torygg went over the line.

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CdrMike, Overwatch Reject