By that definition, everything in the game is developer-imposed limitation (i.e., "If they made the game look like Minecraft, they'd have plenty of space for armor slots!") - but that definition is so over-broad that it is effectively useless.
We can assume that the developers had a lofty target for their vision of the game, and that they ultimately had to adjust their goals to more accurately align with reality. If we assume that armor was unified for performance reasons and not for cosmetic ones, we can ask the question, "What was limiting them such that they had to make a choice between performance and separate armor?" It is reasonable to say that the limiting factor is the lowest common denominator - in this case, the consoles.
Yes... how does that disprove my point? Everything is a developer-imposed limitation. It is not a useless definition, it's a true definition and nothing you've said disproves it. It is their limitation and sacrifice of the game's design elements to free up some additional memory for other minutely better tasks... graphical tasks. It's pure fact that these consoles are not the limiting factor. The original Xbox could run Morrowind and all its armor slots with open cities, even (not that I prefer open cities... I'll gladly be rid of those)... so why are vastly more powerful consoles afterwards limited in ways people cite as "console limitations" when they are in fact perfectly valid on consoles as evident by even past games on weaker consoles doing more than these current games in certain areas supposedly limited by consoles. Everything is a developer-imposed limitation. That's the point. We get more powerful consoles and better optimization techniques and instead of using this new, more powerful hardware to at least maintain something like the number of armor slots, they reduce it and utilize the new capabilities for even shinier graphics. Within the same console generation, they did the same thing, but this time with supposedly better optimization techniques.
This is the fault of the developers of the industry, not the platforms that are perfectly capable of running these games with decent, albeit very minutely lesser, graphical settings and maintaining the features that the same hardware or even far weaker hardware managed to maintain. There is nothing with the SDKs of these platforms saying "you must do this in return for slightly faster rendering"... nothing. Instead of using better hardware and/or better software design techniques to improve on game design or at least maintain it, they're cutting said game design for slightly better performance. In what logical mindset does this make sense?
Better hardware capable of maintaining the old design with better graphics becomes better hardware that cuts the old design for slightly even better graphics... better optimization techniques meant to render the same game designs with more efficiency are intentionally used to render cut game designs for even more efficiency (for graphical rendering). This is not a platform's fault and I doubt they'll even reverse it once we get the next-generation consoles as they certainly didn't reverse it in the jump between the Xbox and the 360/PS3 nor did they even maintain armor slots, city size, NPC amount, etc. in the jump from DOS to Windows/Xbox (of course, in the case of armor slots, they never really needed to be rendered in Daggerfall, but the point stands... Morrowind could have had the same amount as Daggerfall, but it was shunned for slightly better graphics), Oblivion could have maintained what Morrowind had, but it was shunned for slightly better graphics. Skyrim could have maintained with Oblivion had, but it was shunned for slightly better graphics. So many things have been streamlined and cut over time and not just in this series when better hardware should be an avenue for progressive game design, not regressive game design. This is not the hardware's fault and as evident by previous great platform jumps with Bethesda, they still cut regardless of better hardware for slightly even more efficient rendering. This is a developer-imposed limitation, not a hardware-imposed one.