Oblivion is really dumbed down compared to morrowind. Morrowind is bigger, harder, if you can get past the old graphics and bad combat system, then this will be the greatest RPG you ever play so if you can then buy this game now
lets compare weapons first
Morrowind has Daggers, Swords, spears, ninja stars, staffs, crossbows, hammers, axes, bows, throwing knives and darts And Legendary unique weapons like Blade of the monarch or Deadric cresent. (which oblivion really dsnt).
While Oblivion just has the basic weapons sword hammer axe bow.
Story
Morrowind has a amazing story with a climatic boss fight something which Oblivion really lacked. Oblivion has a good story but the finale was just lame there was no final fight.
Dungeons
Morrowind has huge dungeons Ash temples that lead underground to lava pits. Slave plantaions, Mechanical Dwarven ruins. Acestral tombs, caves, Mining sites, tribal camps, Deadric temples or huge castles and a giant awesome part of the map is inside a ash storm at the base of a volcano, and most of them have some spectacular stuff too see and find. (example one dugeon i find indiana jones the next i found a huge fight arena the winner gets a awesome sword, or swimming i find ruins to a deadric shrine or a vampire clan awesome moments like that which oblivion didnt have they just had basic lame cave or aeylid ruins.
and the cities in Morrwind are awesome they dont look like regular building like in Oblivion they have fungus mushroom cities, cities made out of giant crab bones, and clay, a city with huge temples built on water like italy.
Difficulty. Morrowind is hard you really have to pay attention and build your chracter listen to people and train it is nothing like oblivion it is hard but in a good way.
Magic. there is a ton of diffrent spells.
Oblivion had basic fire ice or thunder
but Morrowind Has Flying (yes you can FLY) you can disenegrate someones weapons or armor, telekenisis, and bunch of others
theres also a huge amount of diff enemies Squid people, Robots, Ash monsters, worm creatures, scribs, dinosaur looking monsters, trolls, rat people, etc etc
i could go on forever about how much more variety there is in Morrowind how much more awesome and huge it is its a great game Oblivion is nothing compared to Morrowind, not even Skyrim beats Morrowind. but dont get me wrong Oblivion was great but not compared to morrowind. i know i might sound like a fanboy but i just really like this game
If you can get the Game of the year addiditon it comes with two huge expansion packs as great as Shivering isles (Oblivion expansion)