The OP is an unfair comparison from Tamriel to Earth in a couple ways.
The last 200 years on Earth (Industrial Revolution followed by the Computer Age) are a unique period which has never been nor probably never will be replicated again (assuming you don't believe in Atlantis or past alien civilizations on Earth).
Things don't always progress during 200 years. There are have been plenty of historical periods on Earth, for instance during which things did
not progress. Things went backwards, matter of fact, as society disintegrated or whatever.
One of the reasons for our modern successes on Earth is the fact that those countries who have made the most progress also often have the biggest guns, the strongest armies, etc. It's diffictult to invade these countries, which means they get to have the easiest time advancing their civilization without worry.
On Tamriel, this is not so. I can't speak for all TES games, but the Empire in Cyrodiil during Oblivion's days in particular was getting more and more compliant, more and more lax, and just lazier overall. It was up to "us" to come and save Cyrodiil, for instance, except for very few battles during which we were joined by a few soldiers. The things we saved Cyrodiil's peoples
from would have wiped out Tamriel big time. Once we save Tamriel, the Empire starts crumbling. Lack of adequate management, basically, is one of the thigns which spells out the Empire's doom.
Add all this up, and does it not seem difficult that civilization as a whole (not counting a few individuals here and there) is going to have a tough time making a go at advancement?
And Ash87 below says...
There is magic, so there is little need for them to advance all that really useful technology we use today like cars. Why use cars when there are portals. Why use penecillin when there is magic that can heal everything. Why use guns when you can fire a freaking fireball?
If there is a lack of utility, something will not develop.
Not to mention, Tamriel seems to be in the middle of a dark age or something. The main empire is failing, the organization people have enjoyed for years has been decaying since morrowind happened. Heck, Fallout: Tamriel edition wouldn't be too unbelievable if everything continues to go to hell at the rate it is now.