What exactly are these textures used for:

Oblivion\Data\Textures\Characters\DarkElf\headdarkelf.dds
Oblivion\Data\Textures\Characters\DarkElf\headdarkelf_n.dds
Oblivion\Data\Textures\Characters\Imperial\headhuman.dds
Oblivion\Data\Textures\Characters\Imperial\headhuman_n.dds
Oblivion\Data\Textures\Characters\Orc\headorc.dds
Oblivion\Data\Textures\Characters\Orc\headorc_n.dds
etc

I noticed they are not in gender specific sub directories, but Ive seen mods that replace those particular textures with both male and female features.

Had a look in the CS, these textures appear in the Face Data section of the Race menu.

I noticed this section has 2 columns, is that for male and female?
Do genders in the same race share the same base face texture?

Also noticed each race reuses some textures from different races, I'm guessing that's to cut down duplication of resources.

Each race reusing assets from other races is only in Oblivion.esm. There are quite some body or cosmetic mods giving every race its very own unique textures.

As for those 2 columns, well, 1 is the head mesh and the other the texture. Face textures have to fit both genders.