Textures in Oblivion are applied to meshes using the same technique as many other games: UV mapping. I'm not sure what examples you've been looking at, but the textures and the UV maps created for use in Oblivion do not have to be "continuous" at all.
When creating a UV map in a 3D software package like 3DS Max or Blender, you are basically cutting the 3D mesh into pieces so that it can be covered/painted with a flat 2D texture image created with a program like Photoshop or GIMP. The different "pieces" or "elements" of the mesh that you cut apart can be arranged in just about any manner when designing the UV map layout... they can be rotated, scaled, flipped/mirrored, or even overlap with each other. This is why the texture images in Oblivion look so random/crazy if you don't understand the UV mapping process.
Perhaps you already know this, but to apply textures to a mesh in Nifskope just go to the NiSourceTexture block and click on the purple flower icon to browse to the location of your desired texture file.
Also, if you right click on the NiTriShape/Strip block in Nifskope and go to Texture => Export Template, you can export a template of the UV map applied to that particular mesh.
Frankly though, you don't really need to concern yourself with UV mapping unless you have ambitions of creating your own meshes using 3D modeling software. If you're only interested in re-texturing already created meshes... then they should already have a UV map. For example, if you want to re-texture a suit of armor created by Bethesda, just look at the default texture for that armor and you should be able to figure out what parts of the texture are applied to different areas of the mesh.