Books are everywhere in TES games; you can find them in the lowliest peasant shack. 100% literacy is an assumption that I think the game makes, but I can't for the life of me see how this is supposed to happen socially; where are the schools? Is every child in TES homeschooled in some way? That strikes me as a little difficult, particularly for those who rely on agriculture for their living.

The closest thing I can think of is something to do with the Mages' Guild being involved in education of the mundane type as well as the magical, but nowhere in the charter or in the histories of the Guild that we're given, including its function in the game, mentions anything like this. So where does all this literacy come from?

The MG use to act as schools and priests have often taught the lower classes to read, knowledge is a very valued thing in Tamriel and people love to read.

Nords of Skyrim seems to imply that for the most part, the parents are responsible for a child's education, and tries to go against the stereotype that Nords are just a bunch of dumb, drunken savages. This isn't entirely true, as books like "Alduin is real, and he ent Akatosh" and "Forge, Hammer, and Anvil" are clearly penned by those who aren't all there.