TES III: Morrowind(2002):vertex lighting ~ DX 8.1
water with EMBM
dynamic lighting with day night cycles, weather effects
TES IV: Oblivion(2006)dynamic lighting with day night cycles, weather effects
Per-Pixel lighting with:
specular lighting
normal mapping
parallax mapping
HDR lighting
havok physics
fake tree canopy shadows, actor shadows, self shadowing on actors
x100 view distance compared to morrowind
I think we could call it a new engine. MGE did Distant land only from there. Dynamic lighting and weather are pretty much everything they have in common for renderer side. Oblivion released too early maybe.(same can be said for Morrowind.) Oblivion graphics when it first arrived was WOW(same can be said for Morrowind).
HDR rendering could have been improved. Needs polishing post process effects.
havok physics were underused. Or overused...
No gameplay value. Traps were all preset. Who set them? Why can't we set them?
Shadows lacking, very visible.
Texture quality, very low for PC.
Overall sense of things being improved a little or none on all accounts. So people even call it the same engine while there are drastic changes.
TES V:
Oblivion+(fake shadows out)
Terrain, statics, actor shadows with penumbra renderings
GI(II,SSAO, etc.)
BDRF lighting model, subsurface scattering for realistic faces
volumetric lighting effects(true space godrays, volumetric clouds, smoke, fog, mist with realistic light scattering etc.(missing link in current gen graphics.))
Bokeh DOF, Motion blur
Color grading
advanced sky rendering, weather effects
advanced physics, procedural animations(natural motion alike), destructible environments, flowing water effects with rivers and cascades
procedural environments, procedural moss grow on statics(dynamics
)
Pretty much a sealed deal. I would be disappointed for less.
PS. http://ui22.gamespot.com/1493/11403754973_2.jpg is false advertising. Not that I fell for it.
Besides, final game looks better http://www.tesnexus.com/downloads/images/30054-1-1289262291.jpg.