Depends what are we really talk about in terms of daggers/knifes. The one depicted in blog seems to be quite long. In history of melee warfare shield formations (usually with spear + sidearm) tend to dominate other types of fighting. Some warriors did that to certain extreme (phalanx), others more loosely, but if you wanted to win, you generally adapted tactics of victorious tribes. So untill pike formation nearly every sort of orginized fighting took place in shield walls.
And in shield walls, generally speaking you had two options: keeping enemy at bay with reach (to extreme ancient greeks ways) or closing for a kill (like Romans did). And in second option, you generally speaking do not have a lot of room for long weapons. For example Gladius, one of the bloodiest weapons in history could have blade as short as 45 cms / 18inch. To compare, one of most popular side weapons during migration period and viking age was seax (knife in old germanic). Longseax was common fighting tool in shieldwall with blade as short as 50cms/20 inch. So "long knife" was in fact longer than Gladius ("sword" in latin). Both were however used in same fashion, to close up with rank of shields and thrust from behind it, so your enemy does not see the blade untill it's too late.
It is possible of course to fight in shield walls with slightly longer swords. However for that you either have to loosen formation (solution that has many flaws in itself) or develop tactics or equipment that would allow it. For example Vikings had longer blades (above 70cms) but they used very specific shield that possibly could exploit this length.
So yeah, reach has it's advantages and knifes have theirs. Both had their time and place. It is not as easy as you presented (fist -> dagger -> spear -> bow -> siege weapon -> gun -> cannon -> missile -> nuke) since bow is way older than for example sword or polearms.
I doubt however, that in Bannerlord world physics will be so advanced that shield walls with long knifes will have their uses. So I'd say dagger will be needed for item dropped by belligerent drunk