When i would eat cheese wedges and bread and other food during the opening prison sewer tutorial, my health would be restored (or at least I remember it that way).

Now when I eat food, a health icon appears in the upper right with a timer, and then it disappears when the timer runs out.

I'm a bit confused. What is happening?

Eating food restores "Fatigue."

You get the same game effect timer from eating an ingredient as from using a potion. The ingredient's first effect works on you, just like a potion, but weaker and/or for a shorter duration. It's technically called "wortcraft," and it slightly advances your Alchemy skill when you do it.

Thank you glargg.

Some foods do restore health when eaten. Examples are Venison and Boar Meat. Cairn Bolete Caps (which are found in the tutorial dungeon) also restore health when eaten.

My Atronach characters usually take along a few stacks of Flax Seed on their journeys and nibble on them for snacks, to restore Magicka. I view it as "trail mix." Saves on using up a full potion just for a little top-off.

In the planes of Oblivion I munch on freshly harvested Daedra Hearts for a healthy snack. Beats lugging the things around in my pack, they are heavy.