Who's to say they can't fill cities with crowds of non-unique NPCs?
If they wanted to make a crap game they could.
Anyway, Oblivion had like 60 or so people working on it for 4 years, and Skyrim has what, 150? Most of which have been working for a full 4 years so far and are on the fifth year. I think they'll put a lot more time into the scale and depth of the world.
Also, I think I counted 19 places on the map taking up more than 1 cell, whereas Oblvion had like 11 settlements of even somewhat close to reasonable size.