Oblivion is the worst TES game I've played for any length of time and possibly my biggest disappointment ever (due to me liking the predecessors a lot). It's like a romantic comedy from Hollywood, incredibly skillful craftsmanship but very empty.
For me TES games always were about replay-ability and free form roaming through quantity. The quests and the characters might be flatter than in some other games, but I could always count on there to be something new for me to explore. I really looked forward to Oblivion as I was a big fan of Morrowind which is up there with the Gothics among my top RPG experiences. Daggerfall was also cool for its time but suffered from a very lacking presentation (lots of features weren't fully implemented). These games also had level scaling, but not as extreme as Oblivion. So where did the much more polished Oblivion fail?
Quantity: Too few quests and factions makes you run out of things to do and reduce replay value A LOT. Replay value was IMHO the main strength of Morrowind, and the guilds were much more fleshed out in MW with questlines that were rather long compared to those in Oblivion.
Console interface that's developed for 13 year old's. The game feels like a console port. Menus and the like were not even rescaled to make use of the higher resolution on a PC.
MAJOR: Questionable quest mechanics where you don't get enough oral/written hints, making the bleeding COMPASS ARROW necessary for solving quests. The quests are also more often than not scripted in such a way that triggers have to be activated in a certain order...
MAJOR: Lack of branching in storylines and guild selection: The latter was admittedly a problem in Morrowind too, but there you could ignore it and just focus on one guild and still have enough things for your character to do. Not so with the low number of quests in Oblivion.
Level scaling: A historical weakness of TES games that was in Daggerfall (almost as dumbly implemented as in Oblivion, but less problematic as you could get by without optimizing your character) and Morrowind (where it was less intrusive) as well. But it reaches new heights here, making certain character types (a thief levelling on thieving skills) completely unviable. Any system that requires you to plan your levelling extensively disrupts the fun of the game and kills immersion. Allied NPCs also don't seem to level up to the same extent as your enemies. Anyone tried making the Kvatch guards survive at level 15 or so?
Voice acting: Sean Bean and Patrick Stewart do their part very well, but was there only money in the budget for 3 or four other actors? I hate hearing the same voices over and over again, and I find it a bit odd for High Chancellor Ocato to have the same voice as Glarthir the Psychotic. It would have been better to allow one to switch of voice acting completely, as the repeated use of the same few voices kills immersion.
MAJOR: NPC AI in combination with a ton of escort quests. Possibly dumber than in Gothic 3. NPCs run in BETWEEN MY SWORD AND THE ENEMY. NPCs hit each other and start killing each other. The so called Radiant AI causes a lot of friendly fire incidents to end with wholesale massacres.
A misused physics engine: Walk close to the shelves in a shop and watch the inventory fly all over the place.
MAJOR: Twitch-based combat is not for me. Combined with the "allied" AI its a game breaker.
A lack of weapon types and skills compared to earlier incarnations make each character feel less unique. I know this is cosmetic, but its a big deal to me.
MAJOR: The most populous province of a world-conquering empire has a rather ridiculous population density. The scale is way off. This was less problematic in Morrowind as MW took place on a frontier island, and not an issue at all in humungous Daggerfall.
MAJOR: Random dungeons. Why reuse the obviously faulty dungeon generation system of Daggerfall (combine about ten unique larger dungeon blocks at random)? Sure, the dungeons aren't mating octopi this time, but they repeat. And repeat. Pure shite and inexcusable in this day and age.
MAJOR: Oblivion gates and the, as advertised on the box, infinite realm of Oblivion. Random generated lava levels just don't do it for me. I would recommend any new players to avoid (the realm of) Oblivion and its blasted gates by never going to Kvatch, so the shite doesn't shoot up all over the place.
Mods can fix some of these issues, but not the ones I labelled as major. Fans have told me that there are quest mods and the like, but my experience with mods for all games (including say NWN that was intended as a construction set) is that fan made content varies in quality, and that one has to wade through a lot of poo to get to the nice 5%. I played the game for 20 hours, uninstalled it, and wont touch it again. It bored me and that was due to what I perceive as major design flaws. In the future I'll try to only buy Bethesda "RPGS" from the bargain bin. I concede that the game looks good, some of the quest ideas were neat and new, and that the AI and physics engine could have been nice parts of better thought out design. This isn't Neverwinter Nights 1, a construction set with a campaign tacked on to it, but a GAME with a construction set tacked onto it.