I've always understood this as a religious interpretation of an actual physical universe. I know quite a few others have accepted the other side of this, and believe the religious portrayal is not a symbolic understanding, but factual. It's not a topic I've delved into for years, but at the time I believe the discussion settled on the fact that there is no hard confirmation either way.
There's no hard confirmation either way.
But the view of an Earth-like scientific solar system is impossible. At least until I hear a convincing explanation of how two moons can suddenly disappear from the sky for an extended period, how new constellations can be created and destroyed according to events on Nirn, how stars can pass across the heavens when the normal flow of time is disrupted.
The people of Tamriel are not medieval ignoramuses. They have traveled to Oblivion and Aetherius and through the void, by magic and by vehicles. They know what is there.
There are various other interpretations, but some of them are really just the preferences of Flat-Earthers.
No other culture has the technology or philosophical aptitude to develop such outrageous ideas that contradict the Divines. The current knowledge of the night sky in the lore is only a way to explain what they see, it might not be accurate.
You are mistaken, and your parallels to real-world religious misconceptions of the cosmos don't hold up.
The Dwemeri understanding of the universe was not that advanced versus current Altmeri and Imperial science. Both these cultures have space programs. No joke.
So far as physical laws go, they do exist, but are divine constructs. This is also not in doubt, because the Dwemer studied them scientifically, and were able to break these laws. The ultimate law of the universe is mythopoetic reflection of the Enantiomorph, itself a term from real-world physics. If you wish, understand Anu and Padomay as two opposing atomic particles orbiting each other before a Big Bang.
I would guess that the transparent moon in Morrowind was a glitch that inspired a bit of lore.