I'm starting to realize that much of my review of Oblivion involves comparing it to Morrowind. This isn't entirely purposeless, as much of the popular reaction to the game was comparison to Morrowind, both positive and negative.
That being said, let's talk about travel as it was then, in Morrowind, and as it is "now" in Oblivion.
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Morrowind had limited travel options. Of course, there was always the option of walking, but this was laboriously slow until later in the game. Eventually, you could get magic for flying; this didn't make it into Oblivion. Alternatively, there were various transportation systems that you could use to move between cities instantaneously; all you had to do was select your destination and you appeared in the new city. This involved either the mages' guild or use of a taxi-like service involving giant bugs. (Probably best to just leave it at that).
Bethesda fixed some things very nicely in Oblivion regarding travel. There were no more taxi services, although an expansion added teleportation to the mages' guild halls. You still could hoof it, although this had a much lower cap on your personal speed than Morrowind had. Bethesda did introduce horses you could ride. This is a nice speed boost to travel early in the game, although the system was clunky; the horses were fragile and difficult to control, you couldn't ride one during combat, they were expensive, and at high levels you could run faster than the horses. This isn't even including the odd fact that you are the only person in the game who rides horses anyhow. You'd think that the soldiers or royalty might, but you'd be wrong.
The thing that really gets controversial, however, is Fast Travel. In Oblivion, any location you discover gets marked on your in-game map; every village, every cave, every dungeon, every isolated farm. As soon as your find it, it's marked on your map. The major cities are on your map by default. When you wanted to return to one of these locations in the future, all you had to do was open your map and click on the location; the game would instantly take you there, although time would pass in-game.
You might think this sounds incredibly convenient, given that it can take quite a bit of real life time to cross the entire game world on foot. You'd be right. That didn't stop people from complaining about it, though. "It's ruined the immersion!" they cried. "It makes the game too easy!" People even made programs to take Fast Travel out of the game. I'm not sure what convinced these people that use of the system is mandatory, but it must have been something in their copy. In mine, Fast Travel is an optional system, one I would often ignore for various reasons: Exploration, appreciation of the environment (this is a very pretty game), leveling up various skills, acquiring treasure or materials, etc.
Again, this was a silly controversy. I'm quite curious how Bethesda dealt with it for Fallout 3. In the end, it was a vast improvement over the tedious pace of Morrowind and really helped keep the pace of the game moving, at least when you wanted it to.