there are actually other games that also use it most notably borderlands but i figured at this point everyone knows how minecraft works. i just started last week and cant believe i put it off for so long. Using hard saves adds alot to the game that is missing when you can just reload from any number of saves. and before someone says "just keep overwriting the same save file." thats not the same cause you just load back up before you died. when you die in minecraft and i think everquest had this originally. not only do you start from a particular location but you also have to go back and recover your loot. this adds a sense of tension and a very good incentive not do die. oblivion fast travel is already confirmed so its not a huge inconvenience and you wont spend 15 minutes just to get back where you were.
in order to make sense they would have to have an amulet that would transport you just prior to death to a temple or something or maybe its a service that the mages guild equivalent offers but charges you a percent of your money or a flat fee. however, its only able to transport you and not your gear. there is already in game stuff that can be used to easily explain it. mark/recall spells, intervention scrolls, the amulet that teleported you to some daedric realm in morrowind when equipped. the only change would be that it senses your imminent death and activates automatically instead of being activated by the player.
this isnt just limited to dying. it makes all of you ingame decisions very important and forces you to consider which path to take very carefully since you dont get "redos" like you normally do.