How did Daggerfall's system work?
Basically, you could fast travel to any location from any location. But you had to make some choices in a "fast travel menu", such as travel method (boat/horse, etc), whether you would rest at inns and so on. Based on these choices, fast travel would cost more or less money, and your character wouldn't heal if you chose the fastest/cheapest options.
But you have to keep in mind the fact that Daggerfall was over 6000 times larger than Morrowind. Fast-traveling in Daggerfall actually felt like planning a travel, because of the combination of the menu and the vast distances involved. I'm fairly certain Morrowinds system was introduced because they needed a way to reduce the impact of the dramatical reduction of size from Daggerfall to Morrowind. Once people got used to the size of Morrowind, that's no longer a problem.