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Oblivion had enemy scaling that was horrendous. If you went through the main quest without allocating your skill points you could beat the game at level 1 because every single enemy, dungeon, quest, and boss in the game were the same level as you. If you leveled up to level 20, the rats in the starting village were level 20. If you gained powerful armor at a higher level, the plainsmen at the starting village had the same armor. No matter where you went or what you did, every enemy was the same level as you, even the bosses. You changed the difficulty of the game using the option screen (easy, medium, hard, etc.).
Elder Scrolls 3: Morrowind had traditional leveling, as in if you get slaughtered in a dungeon and then come back in 10 levels, you will own the dungeon and get revenge. That is what makes RPGs fun: seeing your character progress and get more powerful and then going back and seeing how those previous enemies who killed you now get slaughtered themselves.
Elder Scrolls 4: Oblivion did away with this and put in level scaling that made every enemy your level and power level regardless of what happened. There was no revenge. There was no true character progression because as you gained levels, so did the entire world around you. The developers wanted gamers to be able to do any quest, fight any enemy, go anywhere they wanted, anytime they wanted in Oblivion. You could due to the level scaling but that also took away from the best part of RPGs...making your character stronger!! It ruined the game for me.
Thankfully it sounds like Fallout 3 isn't based on this system which is very good.
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