To get it immediately out of the way: I like Oblivion, and I think it's a good game.
It has very good gameplay that keeps you entertained for many hours, and has plenty of various things to accomplish that are sure to keep you occupied. The world is a joy to explore, the combat is simple and easy to master, and the questlines are interesting.
However, the game's problem is that it claims to be an RPG. And as an RPG, it fails miserably. In fact, I think that it was actually intended from the get go to be a hack'n'slash instead. Why?
First off, there's lots, and I mean LOTS of combat. The game is literally built around combat. Almost everything you do ends in combat. Item stats and monster stats are built in a way reminiscent of Diablo series. You cannot make your way through the wilderness without coming across enemies every few steps (if you leave the roads, that is). There are countless dungeons across the entire world filled to the brim with enemies and randomly generated loot. Even the widely-reviled level-scalling is clearly intended to resemble Diablo series in that the further you go, the stronger the enemies get - the only difference being that here, they get stronger even in places you already visited.
On top of that, all the dialogue and quests are obviously watered down because of the game's reliance on combat. Almost every single quest involves unavoidable combat, and almost every quest is linear, rarely offering choices that actually matter. Some of the ideas feel half-baked because of it, like for example the Arena: you have almost nobody to talk to, and besides the single quest from the local Grand Champion, all you can do is just keep fighting new waves of personality-devoid NPCs until you become the Grand Champion. And you can't even choose to join the Yellow Team - it's always the Blue Team, because the game says so. If the game allowed you to talk with the Yellow Team, or even had some possibilities for shady practices, like staged matches where powerful people bet their money, THAT would have been interesting!
But nope. Just combat, with next to no actual personalities to be found. This reflects the rest of the game quite well, sadly. Granted, there are a few genuinely developed NPCs out there, but still.
It's a shame, really, since the game had such potential to be much deeper than that...