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Skyrim does quite a few things better too, like the perk system, graphics and Shouts are cool as well. I'm hesitant to say one is better, per se, but Oblivion has a larger number of things it doe better than Skyrim, in my opinion at least, than vice versa. Hence why I've just bought it on Steam.
But Oblivion does just about everything else better. More rewards for gameplay variety, more options, better world to explore, more stuff to find.
My only major complain; is that if you want things to be worth it in Oblivion; you need to jump to level 30 at the very beginning; because all items in Oblivion are level dependent. So if you get items at level 5; they will be useless later on. This forces a LOT of grinding early on.
Also, some may argue Morrowind is better, but it's a lot harder for newer players to get into.
If it weren't for those two items, Oblivion would be the way to go. Better stories, quests, npc interactions, spell system, music, etc.
Oblivion is far superior on magic, mages, and hybrid builds. Skyrim is far superior for Two-handed, Archery, and smithing is actually very useful to get matching armor sets.
Oblivion is an actual RPG, Skyrim is more action. Oblivion has more variation with racial and sex differences (males usually higher in Strength/Endurance, females usually higher in Personality and Intelligence).
Oblivion when modded for +5 Attribute choice on every level up does strip the more rigorous and tedious grinding down and lets you actually do quests and have fun prior to level 30, and makes it fantastic all around. I was the guy with a spreadsheet tracking every skill gain and mapping attribute gains, etc. for builds in high school, I also love Morrowind, but sometimes I also like to just enjoy the nostalgia without the misery lol.
Oblivion and Morrowind have lots of great quests and plots, Skyrim is just simpler for more uh, attention challenged individuals. Skyrim is the best for playing as a stereotypical Nord barbarian, Oblivion is best if you enjoy wine and cheese, and Morrowind is best because it has absurdly useful and powerful magic and SPEARS which Bethesda has become total jackasses about in all subsequent games and MMOs.
Oh and Skyrim has controller support. I played Oblivion/Morrowind on Console so could comfortably play for long periods of time, PC has mods but also inflicts arthritis and I can't move in a circle or run/walk at different speeds other than WALK/RUN ON, WALK/RUN OFF. Mouse is nice but keyboards are insufferable.
The rest of the game is easily forgettable.
Oblivion was the last game Bethesda made with love before they become more of a corporation who's only major concern was to lie, deceive and make more money.
Oblivion is a far far better game than Skyrim, great story especially if you include the expansion.
Please keep in mind i with pride own the game on a wonderful physical copy before steam was a thing and i would never trade that up for rental on a crappy client.
Valve promised a lot of things with steam when they were new, but it was all about controlling you and what you do with your games and that is exactly what they do here.
At any time they can shut you out of your purchases because it's their client, they write their own rules and eulas about what you can do and not do, you have no right at all, you have no pride of ownership like you did with physical copies.
Digital games are not faster acquired, you have to down and download rather than just installing the game and be over with it.
Valve does not in any way offer cheaper games, contrarywise they have ruined the 40 dollar 20 dollar expansion prices we once had by allowing corporation to take advantage of their platform which also means you as a customer.
They have single handedly ruined the relationship and communication level gamers had with developers a very long time ago, perhaps the spoiled latest generations has also done their part.
But when you go into detail Valve has in truth done
nothing to better the pc community, they only made it much worse.
They are for companies that pay them, they never really cared about customers, that's a truth you won't read often.
If you like me miss owning your games rather than renting them because some evil lawyer told you so in their EULA then let's start a petition and get physical copies back into action so we say goodbye to Valve.
It's only dead if you give up.
https://steamcommunity.com/app/489830/discussions/0/2592234299555101905/
Really, Skyrim is just the logical conclusion of where Oblivion was heading relative to Morrowind, but that's a deeper and more complicated rabbit hole beyond the scope of this thread's discussion.
Quests: Oblivion wins.
Factions: Oblivion wins. By a huge margin. (Morrowind was even better, though)
Beards: Skyrim wins.
Character appearance: Skyrim wins.
Horses: Oblivion wins.
World: Tie. Edge goes to Skyrim.
Weapons/Armor: Skyrim wins.
NPC's: Tie, slight edge to Oblivion when it comes to dynamic random crazy occurences. (randomly seeing a redguard woman punch a bear in the ass and then run away screaming "dont hurt me" will forever be burnt into my memory as one of the funniest/greatest non-scripted NPC interactions I've ever seen)
Magic: Oblivion wins. Modded, Skyrim wins.
Combat: ... Tie.
It's a toss up for me.
I don't mind Oblivion's levelling system; I just play without planning ahead and any levelling difficulty surprises can be solved with the difficulty slider. No point spending time grinding to minmax semibroken mechanics.