obviously you are new to modding.
Unzip to a temporary location to review the readme. The readme says how to install the mod.
move the data folder (if there is not a data folder inside the mod then move meshes, textures, and the additional sub folders + the .esp file) into your data folder and when prompted to overwrite say yes. This is not overwriting anything, this is simply merging the folders with each other. All your original Oblivion files - the vanilla meshes/textures/voices/trees/ect are all packed into special archived files that you cannot access called BSA (you can access them but you cannot change them and if you try to change them you are working real hard on helping your Oblivion not want to work right).
I recommend using a mod installer like OBMM (Oblivion Mod Manager) which can create files called OMODs that creates back ups of the original mod, plus it is pretty intuitive to know where to place what in the Oblivion data folder. Just search on the Nexus "Oblivion Mod Manager".
If you need help installing a mod using OBMM just ask here - please do not spam the forums with multiple topics. If you do get it, then only install mods one way or the other, because Oblivion can be very weird and not want to work properly if some mods are installed by hand and some mods are installed by a program.