From uesp:
http://www.uesp.net/wiki/Oblivion:Levitation_Act
That is all I have heard before this, just the weak cop out they used for excluding levitate from OB.
nice little quote from that page...
The problem with the given date of 3E 421 is that the events of Morrowind take place in 3E 427, as evinced by the Release Identification note, although it is possible that act does not apply on Vvardenfell.proves they were in a hurry to come up with an excuse in-game for it, completely forgetting morrowind's starting date.
kinda doubt the last part, about vvardenfell not being affected by it...
also, what exactly is the levitation law, did the mages just get forced to stop teaching and using it... or was something altered to actually disable the ability to levitate?
if its the former, you'd think necromancers and outlaw sorcerors would still use it... if its the latter, you'd think it would've reached vvardenfell, too, if the law supposedly took hold six years before morrowind...
ah well, this is getting into more of a discussion on lore than skyrim, now...
back on topic... i highly doubt we'll ever see levitation again, since it was mainly taken out for balance issues, and it would just... not work out.
i mean, with dragons occupying the air... would you REALLY wanna be moving through the air, with nowhere to hide, since all the hiding spots would be on the ground?
not to mention, the combat is completely different, i dont think it would play out right if you were floating.