Well, one of the major problems that I had with Oblivion was that from far away, it looks great. Trees swaying in the wind, people talking, and weather-worn Ayleid ruins.
It seemed however, when you got close up, things fell apart. Animals in the forest pass by each other with a courtesy nod or chase you across a continent, "SAW A MUDCRAB TODAY", and those Ayleid ruins just go "Hey look! I'm old! You can tell by my skeletons." In Morrowind, the Dwemer ruins felt, well...alive, steam bellowing, clockwork guardian clacking down a corridor, and you can pick up random stone gears.
The environment and mythos was also much better. The black Dunmer were colonized by the white Imperials (obvious allegory is obvious), and they were livid about it. Their religion was being pushed aside, their traditional culture supplanted by mercantile Imperial traits, and their lifestyle was under constant threat. This was portrayed really well, at least to me. Even the bad guy was interesting with the whole 'what really happened at Red Mountain?' feeling to it. The random Dreamers that would pop out and talk/attack you in urban areas, and the threat of zombification made those dungeons so much more interesting.
Complex characters, good storytelling, and minor details will make a game great, rather than just, "HERP DERP I'M AN EVIL DEMON MONSTER DESTROYIN' UR CITY CUZ THAT'S WHAT I DO BRO."
Also cliff racers. I must have spent 6+ hours engaging in genocidal extermination of those foul things. Ugh, just remembering that damn screech is angering.