Not only does this discourage exploration but it also discourages the player from getting involved in the factions within the game. Why enter a dungeon when there is no risk/reward? Why climb a faction questline to receive a item that will be inferior in 5 levels? As shallow as it seems, players need incentive to do things. Its a basic concept that has been around in the RPG world for decades.
To complicate things further, we have a crafting system which allows the player to create items that are infinitely better than anything that exists in Skyrim (Including weapons forged by the gods) Speaking of which, why are the daedric artifacts so terrible? Its as if they were aimed towards players levels 5-10. Bethesda said they expected the general population to complete the game around 30-50 so why then are these "artifacts" no where near end-game quality?
Players say "Don't use this/that", "The game is not about min/max, its about roleplaying", well my response to that is, how can I immerse myself in a world that contradicts itself everywhere I turn? Players crafting better weapons than gods? Items that have different stats when the player acquires them? Skill trees that I have to completely avoid so that I don't completely break the game?