It's used just as an expression. Oblivion exists, but it's not a plane of damnation, it's just a Daedric plane that represents Mehrunes Dagon's qualities as the Daedric lord of destruction.
Mehrune's Dagon's plane is a realm of Oblivion. The word Oblivion itself does not specifically refer to Dagon's plane.
There are the Nine and they are gods, so it's polytheist. Some people worship Daedra, also, which aren't necessarily evil.
It is frowned upon in most cultures. Dunmer are the exception, and even that's conditional. Hence the demon attribution.
Albides, why is Azura a "femme fatale" or a "succubus" (your link)?
On femme fatale; see Vehk on the subject. She's not the classic sort of femme fatale who seduces to achieve a result. But she is - or rather, can be- a dangerous and manipulative woman. Which is why Vivec turns a http://www.imperial-library.info/characters/trial_vivec.shtml into a trial against her. I've always quite liked her, personally, and would agree that she appears good and seems to have genuine ties to the mortal world (as revealed in Words of Clan Mother Ahnissi). Some would be more critical and point out that she allegedly cursed an entire race for the actions of three individuals, and still held a grudge for a few thousand years.
On succubus, she isn't. I was giving an example of a beautiful demon.
A relevant quote by a dev found http://www.imperial-library.info/book_daedra/:
On Daedra as Good or Evil: As some have said, they are neither. Some are certainly more aggressive than others. Some have a greater tolerance for mortals. But, I wouldn't say that any are good or evil. Some people think of Azura as a "good" Daedra. That could end up being a very dangerous misconception in the Elder Scrolls world.
See also what I originally said: "
Demon isn't really a description of appearance. More a term for those supernatural beings we reject."
She's actually one of the Daedric princes that are considered "good" or at least, not evil. I don't think the Daedra should be called "demons". They're not supposed to be demons.
I don't doubt she can seem benevolent to some. Conventional wisdom says that neither the ones who seem good nor the ones that seem evil really are what we think they are. They're largely amoral.
I rather like this quote on the subject in the Sermons:
'But then why, you ask, do the Daedra wish to meddle with the Aurbis? It is because they are the radical critique, essential as all martyrs. That some are more evil than others in not an illusion. Or rather, it is a necessary illusion.'
I interpret this to mean they're seen as antagonists. Obstacles to overcome to better oneself.
Finally, I'll add another MK quote onto the pile.
Oblivion has been synoymous with Hell in the TES 'verse for nearly ten years now (see Redguard). Same with daedra/demons (see nearly any myth about daedra or evil gods-- more than likely, it'll be referred to as a 'demon').
They are not the same, but they are useful for context, and denizens of Tamriel freely use all of the terms all of the time. When, like, talking about hell or demons, which they usually don't do at night when Oblivion is staring right over their heads.
It has nothing to do with dumbing down anything. In fact, it has more to do with widening the scope of what those concepts and beings are to the people that live outside their realms.
No need for a four-alarm fire. Again. Read more lore, people. It's why it's there.