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2. Weapon skills increase damage with weapons by 0.5% per tick, same with magic skills but reducing magicka cost instead.
3. The best vendors are in more harder to reach locations.
It's not like it was in Oblivion where the auto scale system was almost omnipotent. Skyrim has somewhat "middle ground" auto scaling system. Something in between Oblivion and Morrowind where there is almost none of auto scaling. Skyrim's auto scaling system thus is the most balanced of these 3 ES games.
It does.
Merchants' selection of goods scales with your level too. It gets better with your level. I think when you get to level 50 they will be selling you best they can. At least in the cities of the main Skyrim land. Not sure about Solstheim.
Some static enemies may have new types may be introduced as well, for example, skeletons.
Some enemies scale, but only up to a certain point and have a level cap. Dragons, bandits and draugr fit this.
Some enemies scale indefinitely. Things like assassins who try to kill you, thieves who try to steal from you fit this criteria. Not many enemies do this though, most are either static or have a fixed cap.
It should be noted that not everything scales at the same rate, some enemies may only have a 0.8 scaling to your level, while other enemies can have 1.2 scaling to your level.
2. Yes at 0.5% per level, except for magic which is 0.5% less magicka cost per level. Unfortunately, this does make magic very bad for scaling in the mid/late game as magicka is only an issue early game.
3. Merchants scale with your level but not each merchant is weighted the same. For example, the "Radiant Ramiant" store in Solitude has a massive selection of clothes and items that are enchanted, while a similar merchant type in Riften who sells at a stall has a far less variable selection and a lot of them are probably not going to be enchanted.
That said, it's completely random. Even at level 218, there are days where merchants are just selling me regular 'ol iron gear or leather/hide armor.
Everything else can be out leveled or outclassed by building up skills and perks.
2. Yes, simply gaining skills improves weapon damage but not nearly as much as assigning perk points do.
3. Taking the Investor perk will allow one to raise vendor level though that only improves stock to a certain extent.
Yes slightly, but all the real power comes from perks.
Higher levels will equal better gear, but some merchants are better than others. Khajiit Caravans usually have better stuff than your average merchant. However, the player can create better items than anything you'll find, much sooner too.