That sounds fun... any instructions on how to do so? Also, what do you mean? Like falling off of something and then just watching what happens? I'm always annoyed in OB and Fallout 3 when it prompts you to load a save game instead.
Yep, it means that you'll be able to see what happens after you die.
Do you have Wyre Bash? If so, open it, go to the mods tab, go down to 'bashed patch', right click on it and say 'rebuild patch', and then go down to tweak settings, tick it, and right click on 'camera: pc death time' and select unlimited, and rebuild the patch. Alternatively, if you don't have Wyre Bash (although I highly recommend that you do use it) then http://planetelderscrolls.gamespy.com/View.php?view=oblivionmods.detail&id=416 will also do the trick.
As for Fallout 3, if you use the console and say 'tfc' it will go to freecam and it won't make you load.