But if we get levitation back, then shouldnt we be able to levitate past these mountains?
That's a problem to worry about if levitation actually is in the game, which we don't know yet. And it will need to be adressed for cities too, assuming the game uses the same walled cities in a seperate worldspace approach of Oblivion.
But really, I'm fine with invisible borders if that's the best Bethesda can do, so long as they're used only on the borders of the map (In other words, I do NOT want to see the game use invisible borders to keep players from reaching locations
within the boundaries of the game through means other than a linear path the developers meant us to use, like New Vegas does.) the game needs to put the border somewhere, after all, since it can't have the whole Tamriel in it. The whole "endless ocean" thing worked well in Morrowind because the game took place on an island, so it would not look odd if there was nothing beyond the explorable area, but Cyrodiil couldn't have done that. While Bethesda could of course use natural borders, that only works if there's actually supposed to be such a thing there, if the map tells you that there's no mountains on the border between Cyrodiil and some other province, yet in the game, there are, its going to seem kind of strange. And the game just not letting me leave the explorable area at all didn't bother me, since I wouldn't want to do that anyway. There's no towns out there, no dungeons, no enemies to fight, nothing of interest, so why would I want to go there? If the game tells me "You can't go that way, turn back." when I'm trying to go beyond the explorable area of the game, I'd do just that. The only time I ever want to go out of the border of Cyrodiil in Oblivion is when I'm using mods that add things outside the in-game border, and when I'm doing that, deactivating the border is simple enough. Still, I suppose where mountains and other physical barriers would seem plausible, using them would at least feel a bit more natural than an invisible border blocking your progress, so I'd say try to put such borders where they belong, but if having real borders would just look out of place on some regions of the map, I would not object too much to invisible borders.