In order to fully understand which side you’re favoring in the negotiations, you need to know what you’re negotiating about.
Your first decision starts when Ulfric takes offense to the presence of Elenwen at the meeting- while she will say aloud that she’s here only to ensure that the terms of the White-Gold Concordat aren’t being breached, she is still Thalmor and actually would like nothing more than to cause more trouble for both Empire and Stormcloaks alike. She’s subtle about it, though, and you can generally override her influence in the end so whether or not she stays comes down to you.
The Imperials, for whatever reason, want her to stay. The Stormcloaks, obviously, want her to leave. This is your first chance to favor a side. It also influences what your next decision is about!
If you kicked Elenwen out, then the Imperials will request that the Stormcloaks turn over Riften (should they still hold it), or another major hold (if not).
If you did not eject Elenwen from the meeting, then the Stormcloaks will demand that the Empire leave Markarth (should they still hold it), or another major hold (if not).
Whichever demand is made, you are then granted the decision between exchanging the desired major hold for another major hold, or a minor hold. The major holds are Markarth (The Reach), Whiterun (Whiterun), and Riften (The Rift). The Minor holds are Morthal (Hjaalmarch), Dawnstar (The Pale), and Falkreath (Falkreath).
If you choose to exchange a major hold with a major hold, then you will be percieved as neutral although the faction that demanded a hold will act like you’ve sided with their opposition.
If you choose to exchange a major hold with a minor hold, the side that is gaining the minor hold will rightly view you as being ‘on the other side’.
Whichever side is currently acting like you’re against them will next threaten to leave the bargaining table- because they feel these truce talks are not even-handed. Fortunately, Esbern is a cool guy, and he manages to give a speech about dragons and fiery burning death from the sky that eats your soul after it kills you, convincing the ‘offended party’ to stick around.
While opting to stay, the party that was just acting offended then demands that some form of concession be made to them in the interest of accomplishing a fair truce. There is a fairly long list of four or five demands that either side can make, but they’re going to be relatively happy as long as you give them one of the demands. If you want to keep things ‘fair’, just give in on the first demand and all will be relatively well. If you would rather ‘stick it to them’, however, refuse until they run out of things to demand.
Once the talks are over, Arngeir approaches you and lets you know how you did- if you stayed fairly neutral he mostly just says that things went about as well as he could have expected given the bad blood here. If you distinctly favored one side or the other, though, he’ll point that out for you (just in case you didn’t realize it yourself).
