Yes, it's clearly not a totally mythopoeic world. This is evident in the attitudes and practices of the NPCs and their societies, if nothing else... But I do think it's present to a degree, and is an important theme.
Slightly OT: I think the 'simulation' aspect of TES goes even further than content- it is formal. I find myself thinking a lot about the use of narrative in games, and one of the things that has occured to me is that TES, because of its mechanics (open and increasingly 'radiant' world), has a strong streak of something like realism or naturalism, in a literary sense- meaning that there are chains of causality which the player can discover, which are not arbitrary, and which help to define the world. So for example, so-and-so is a skooma smuggler because he can be seen to smuggle skooma, if one cares to follow him around, and not because he occupies some formal or metaphysical category- and he exists and smuggles skooma regardless of whether anyone decides he is relevant. Or even: Dagoth Ur is the result of a complex series of historical events, whose meaning and veracity are up to you to decide, and his cultists are out there if you care to look. In other words, at a very basic level, the game tends (increasingly, if 'radiant story' is half of what it could be) to encourage the view that its world is a system that operates according to laws which can be understood.
[edit: I should have added: I agree there is also some poesy stuff, though it seems to operate on a different level. Though they may not always be contradictory tendencies: Nirn is indeed a 'thou', in its dream-like mythical moments, but I think it is useful imagine it as some kind of quasi-gnostic dialectic, ala Hegel or the theologian Boehme: if reality is the dream of the enantiomorph or what-have-you, the contradictions inherhent in that primal unity have multiplied and become ever more realised, to the point that they have become a complex, objective reality whose inhabitants/aspects can only dimly grasp its previous nature by way of metaphor.]
Compare this to the fomalism that seems to inform, say, a Bioware game, where the player is basically told 'so-and-so is a villain and he killed your dog, go get him', and literally every character and event is a plot device, in the formal sense that they exist to steer the story. Bethesda's worlds seem to contain their own stories (though not entirely, obviously), while Bioware's worlds are often quite arbitrary.
Back on-topic: I think the suggestion that the lack of verbalised spells was probably due to constraints on voice-acting or not wanting to annoy the player (or perhaps even because no-one thought of it) is probably correct. However, from a lore perspecitve, I think an explanation that conforms to our experience of non-verbal spellcasing and non-silencing 'silence' is preferable.