So, if Oblivion is the night sky, then how do the planes of Oblivion work? Shouldn't one be able to see them from Mundus, like the stars and Aedric Plane(t)s? Are they pitch black, so one cannot see them clearly?

Considering their extrageo plane(t)s, it might simply be a case of them not being readily visible without telescopes or orbital observatories.

I always thought of the non-plane parts of Oblivion to be a sort of cloud, composed of cooled, condensed creatia that obscures the realms that are bubbles in that cloud.

Its a case of nestling infinities.

The Mundus is infinite in size and encompasses the planet of Nirn, the Aedric spheres (which are also infinite), the moons and other celestial bodies.

It is surrounded by the infinity of Oblivion, which houses the Daedric realms of Oblivion, presumable these again are infinite.

The mortal mind cannot comprehend gazing into infinities that hold infinities, so these are translated to our senses as spheres.
As appearances goes, Nirn is a sphere, orbited by spheres, inside the sphere of Oblivion (the night sky).
The spheres of Oblivion are not a part of the Mundus though, Mundus describes Lorkhan's project of creation only.
The plane(t)s of the Aedra are visible because they are ultimately connected to Nirn, a part of creation.
Some of the Daedric spheres can be known to denizens of creation because of scrying, diviniation, other magical techniques or even travel there.
Some of the spheres (such as Mephala's) are so far removed from mortal concepts that even a description of them cannot be known, or they are obscured on purpose.

nice