Lore wise, the Schools of Magic are just arbitrary categorizations.
They're totally susceptible to change and modification.

In fact, with the dissolution of the Mage's Guild, I'd be surprised if the classifications of magic HADN'T changed from the time of Oblivion to Skyrim.

The title of mysticism was dropped, but mystic magic remains and the spells have been dispersed into other schools.

You can still be a mystic, just the title "mysticism" is no longer used for those spells.

The only effects that got removed were the teleportation ones, others were moved to a different school proving that the Mysticism school was redundant.

Teleportation was either removed due to the fast-travel, or I've even heard that they've removed it for Lore reasons, like Teleportation should be rare, it shouldn't be taught in a public guild, or something...

Remember, Daggerfall had a magic school called Thaumaturgy which was removed in Morrowind. It contained spells such as Levitate and Water Walking which were moved into Alteration, and Charm which was moved into Illusion.

Or the developers wanted to streamline the skills. Adding enchantment to the magic skills caused a numbers problem, ie. too many skills. With alchemy and mysticism there were eight skills. The other skill sets only had five and six respectively so they dropped mysticism and moved alchemy into the stealth skills set. now each skills set has six skills. All nice and even.

As for lore, someone once said since they wrote all the lore for the game in the game, they could decide what was real and what was merely fiction. The merging of magical schools is actually something that the scholars at the arcane university could do over time and be perfectly legitimate. Sticking alchemy in the stealth skills is more of a stretch in my opinion. It could have as easily be merged with enchanting as it is merely imbuing a liquid with magicka.

^^^
This.

We don't actually lose anything by it being dropped so I see no issues with it being dropped.

To be fair, Mysticisms place as an actual school of magic has been heavily contested in the TES universe itself. Just read some books in-game on the subject.

It's also viewed by many players to be the least useful school. Especially in Oblivion.

My guess would be that they removed some of the mysticism spell effects outright, and couldn't leave the school intact with a short list of spells.

From what they've done in the past, I would presume that some of the notable effects of mysticism (probably the reflect effects) have become part of the gimmicky Dragon Shouts, and the only way that they could make believe that the Dragon Shouts were anything special was by limiting or even eliminating any other access to those effects, so mysticism ended up eviscerated.

I think that's also a good part of why spellmaking is on the chopping block. To include it, they're going to have to come up with a way to gimp it so that Dragon Shouts don't end up completely worthless.

Sort of like what they did with enchanting in Oblivion so that sigil stones wouldn't be completely worthless.....

Or they put it into alteration, because I'm still surprised reflect spell and damage wasn't alteration to begin with...

At the end of the day, Magic is just magic and different cultures of Mages' Guilds categorize spells differently. Also, a spell effect can also be defined by how it comes into effect. Fireball could be destruction, but creating that fireball can be either conjuration, evocation or even illusion. and all restoration spells are essentially a collection of conjuration and alteration/transmutation spells. Neither Destruction nor Restoration make any sense other than separating damage and healing from those that do neither.

There's also an ocean of spell effects that never make it into an ES game too. Just check out D&D.

Well moving hostile absorbs to restoration looks strange does not, thats not proving that the Mysticism school was redundant, thats MAKE Mysticism school become redundant, before mysticism was work well as alternative to other schools, in Oblivion restoration and destruction become to powerful in comparison to other schools, not alternative but major ones, schools become not equal and Mysticism become outsider.
Fast travel not option thats will replace mark&recall or divine intervention because they work in different way, can you fast travel in interieurs or while combat?
Can you fast travel to specified placed by self spot? Can you fast travel instant without loosing of time?
Lore reasons, oh well Mysticism was Old Way, special magic school w well then if I want roleplay not apprentice who start learns way of Mage but Altmer mage from Psijics order, how I can do thats, as well how I can create NPC without of such spells?
Another in Daggerfall wizards provide teleportation service, Mage Guilds and Frostcrag Spire has teleportation pads, The Battlespire has the Pillar of Light, a teleportation device, Morrowind has Propylons, Sloads due their biology relay on teleportation and levitation, Shadowkeys open portals, many planes connected by Portals, definitely teleportation was rare enough to replace it with fast travel completely.
OK Almsivi Intervention out of world in Cyrodiil, but Divine Intervention is not why remove it?

Bethesda shouldn't be afraid to change their lore to accommodate better gameplay/aesthetics/stories, thats all I will say