Can people stop using the phrase "dumbed down" when they obviously don't even know what it means...
Dumbed down;
Simplified or made less complex. In this case you are correct, however I keep seeing this response to posts about the dumbing down of Oblivion, and in most of those instances they are using it correctly. Many things were simplified and felt dumbed down in oblivion.
In the matter of the topic, I have said it many times, from the Oblivion boards to TES general, to now. Scaling of items and random loot placement takes away the purpose, and indeed the joy of exploring a new dungeon. I haven't visited some of the ones in Oblivion to this day, because I know what I will find -- a ton of bandits zealously guarding a chest containing a bolt of cloth, a wooden spoon, an hourglass and four gold. In total, since all the clutters items sell for between 0 and 2 gold, the treasure is typically pretty worthless. Occasionally I'll find a soulgem to refill my weapon, but that's about it.
Morrowind's handplaced loot was great. I found all kinds of things just by exploring. I found the bittercup weeks before I knew what it was, and kept it on display in my house because I was afraid to drink it in case I needed it later. I like the idea that I could have, and it would've had eventual consequences. I found Chrysamere accidentally. I used it for ages before I ever did the legion quests. These sorts of finds are part of what made Morrowind so enchanting to me. The loot, the culture, the setting. I felt like I never knew what was around the corner, or what I was going to find next. I miss that feeling.