Penn & Teller's Smoke and Mirrors, an infamous unreleased 1995 video-game, had a mini-game where you drive a 400 mile stretch of road at 45 miles per hour in real time with nothing to do but keep the bus from veering a little bit to the right. It took eight hours and once you've finished, you'd be rewarded with a single point and be told to drive all the way back. It was a joke of course, particularly in response to the slew of anti-violence video-game controversy of the time; if you take away all the controversial aspects of a video-game, you'd probably just end up with a boring game that no one will want to play.
Daggerfall is sort of like that, only they kind of forgot the joke part and added blood, violence, orcs, magic, demons, harpies, naked women and prostitution along the way. Also you can fast travel to any location on the map. Point being, you could still ride eight hours across the scope of the playing world in real time on the back of a horse if you really wanted to.
People compare this game and its predecessor Arena to Morrowind and Oblivion, the latest two Elder Scrolls games released in 2002 and 2006 respectively, but that is not exactly fair to either game. The first two and last two of the Elder Scrolls franchise were developed mostly by different teams headed by different lead designers and taken in different directions.
The first two were all about massive detail on a macro scale; they created unbelievably rich worlds complete with working seasons, holidays, a pantheon of religious cults and gods all developed to surprising detail, skills and abilities which suited all levels of gameplay as they related to this world up to and including the languages of each group of intelligent monster you may encounter in your dungeon delving. Daggerfall is ridiculous and impressive in how utterly exhaustive it is to create a believable breathing world that your character can immerse herself in, to the point of sacrificing "tight" or "balanced" gameplay elements.
Morrowind and Oblivion, however, were about micro-scale and bringing gameplay issues to the forefront. They lost the immersion of the fictional world the video game was set in -as a whole- in favor of creating a more atmospheric setting in the elements of the world you actually see with your eyes. In Daggerfall and Arena, these elements were largely left up to the imagination; in Oblivion and Morrowind, they actually modeled the mug, silverware, platter and biscuits set out on a kitchen table, and encouraged the player to interact with these items. The world was actually filled with rolling hills and swaying trees, visual feedback for a more fully detailed atmosphere you were forced to only assume to exist in preceding games.
And yet, both Morrowind and Oblivion severely lacked the feeling that the gaming world truly existed beyond the visual feedback you receive of it. There were no seasons, no holidays, no vast array of wacky cults worshiping a pantheon of bizarre gods. Gone were many, many aspects of gameplay because the developers of Morrowind and Oblivion felt they "weren't fun"; in Daggerfall these didn't exist to be "fun" but to serve as an aesthetic footnote in a grander and more realistic world. In Morrowind and Oblivion, you feel from the start that your character is the center of the world -- that everything was build around her -- whereas in Daggerfall you will eventually earn the feeling satisfactorily, that you are an important element of the complicated and scandalous politics of the kingdoms around you, through the development of a complicated and branching plot.
As far as actual gameplay is concerned, it is easiest to think of Morrowind and Oblivion as RPGs and Daggerfall as simply the most massively complex Roguelike ever made. Sometimes when doing a quest for a guild or for many parts of the main plot, it may feel as if you are going down a vast dungeon to retrieve the Amulet of Yendor, only to try to find your way back up a complicated and (pre-)randomly generated dungeon full of treasure and strange enemies. To Morrowind and Oblivion's credit, they may actually be more fun to play, especially if you absolutely despise dungeon-delving. There is a saying in the video-gaming community that how good RPGs are is based directly on how soon you get to a dungeon and how big that dungeon is -- well, in Daggerfall you start in a dungeon and dungeons in this game are pretty long and maze-like. But if you enjoy Roguelikes (haven't you ever played Nethack? How about Pokemon Mystery Dungeon?) you won't mind and you'll probably enjoy the setting, the vast detail and exhaustiveness of its immersive gameplay.
Daggerfall is one of the most impressive games I've ever played in what it accomplishes, and at the end of the day it gives me a much, much more satisfying feeling to play than either Morrowind or Oblivion. And that is what matters to me. When playing a game there is more to setting and atmosphere than the visual feedback you retrieve from your display, and there can be a unity between this and gameplay that Daggerfall touches on but Morrowind and Oblivion seem to lack, and although I do not want to feel pretentious saying so this is somehow more of an artwork in that regard; it is something that I can feel that I can stand back and take a look at and admire. That is something that not even the much over-hyped bugs can destroy.
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