The game does take place on a fantasy land on a fantasy continent on a fantasy planet (don't remember any of the TES games mentioning the name of the planet, but anyway) with fantasy gods and daemons and creatures with a different, fantasy culture... yet, all of it, is based on life as we knew it in European medieval times, with kings and queens, castles, legions and armies, alchemists and mages; medieval lore with elves and all with heroes fighting trolls, dragons and daemons; with heores and crusaders clad on suits of armor, with shields and swords and arrow and bows; with many cultures starting to come together, etc etc etc
And you can't have it both ways, either... So if it takes place on a fantasy land on a fantasy continent on a fantasy planet with fantasy gods and daemons and creatures with a different, fantasy culture, yet you want earthly, real-life, factual human interactions.. frankly, earthly human interactions don't seem in place in a game that takes place on fantasy land on a fantasy continent on a fantasy planet, don't you think?
Why cant I have it both ways, for one?
Besides, Nirn is so far from being based on medieval Europa that its not even funny anymore to hear you say it is.
The creation and history of Mundus are very complex things, with actual gods interfering in day-to-day life.
Cyrodill slightly resembles some elements from Roman and medieval history solely due to convergent evolution, because sometimes certain ways of doing things make sense.
It looks medieval because they have no need of technology. There is magic. They dont need hospitals, they have temples with healers using spells. They dont need guns, they have battlemages blasting arcane fire. Etc.
Tamriel is a very complex and interesting place, far more so than boring ole medieval Europa.
The imperial library and the UESP wiki have lore and books that can help you understand its depth, diversity and originality.