A typo. In an interview, Todd stated that id Tech 5 engine is good for making static and confined spaces.
Incorrect. You've either misquoted Todd or Todd was mistaken, because id has said otherwise and Rage (id Tech 5's showcase game) is an open-world game. id Tech 5 is specifically geared towards large, open environments, and a lot of the technologies in it are aimed at efficiently handling just that.
EDIT: Note that id Tech 5 games are also much harder (in some major ways, particularly involving the overworld map, actually pretty well impossible) to mod specifically because of this (megatextures take far too much power to bake for anyone to really be able to produce mods of any maps using them), so it's still not suitable for a series like TES that has a fairly gigantic focus on community modification.