This has been said before somewhere in these forums, which I thought was pretty smart. In the TES universe magic basically replaces technology, and causes it to stagnate. Technology breeds from necessity, and if there is no need to get over those mountains when you could just levitate/teleport, then there is no need to think of, build, test, and fly an airplane (that is a poor example but you get my point, hopefully).
I get your point, kinda like walking on water, why buy health potions when you can use a healing spell? But I guess in a way it can be argued with, as in TES you have your mages and your barbarians, and people who aren't that powerful of mages, the less willpower fused of people they would need things to help them out, not necessarily a highly powered mage but a simple citizen would most definitely require this, sure it doesn't have to be completely physics based, but it could just be that magic has been enchanted by a mage to make it work etc. But before like blacksmithing if magic replaces technology then there would be no utensils for blacksmithing at all as in a way a utensil to help create something is a advancement of some sort. I guess you could say that in the TES universe as a whole it is a mix, both technology and magic but in terms of ratio it'd likely be 35:65 (Tech:Magic).. So technology advances is still quite plausible in a sense.
But I don't overall mean that Tamriel is to become a futuristic place in over two centuries, just a little more shaped from the recent events and advances or dis-advances are a more obvious way of showing it, and not just technological changes but perhaps economical changes, like the way the place is ran, this could show the differences between the rebels and the other side(empire I believe?), like perhaps the empire is ran more strictly whereas the rebels is not as strict for example.