What makes magic overpowered? I don't disagree that it was overpowered in oblivion, just thinking more about the "why" and what they could do to fix it.
My personal thoughts -
#1. Most NPCs/enemies have little to no damage reductions against magic.
I think some magic damage should be mitigated by armor, or that certain types of armor should increase resistance vs. magic, as well as shields being able to block it.
This could make the different types of magical damage have strengths and weaknesses - damage health for example might bypass armor, but generally deal less damage, while fire would be mitigated a lot more but deal more damage to unprotected enemies. Enchanting served this purpose to some degree, but how many NPCs wore anything enchanted with magic resistances?
#2. More powerful magic needs significant drawbacks outside of magicka cost.
I don't think this a good way to balance it at all. More powerful spells need to have limitations that don't hamper mages with tedious potion chugging. They should have cast times(reduced as you advance in skill of course). Another possibility would be cooldowns on stronger effects so you have to use them wisely. Invisibility for example - from the perspective of a rogue/thief type character, this spell effect alone almost made stealth obsolete in Oblivion, sneak attack modifiers were it's only saving's grace. Every spell effect being cast in exactly the same amount of time with the same ease, with no limitations other than magicka, just doesn't make sense and isn't balanced.
#3. Disruption.
Any damage in general should have some chance of disrupting a cast depending on the caster's skill level and maybe endurance/willpower, but certain weapons/items could go a lot further - choking powders for example.
#4. The spell system and/or creation system needs more limits
Saying this makes me a little sad as there's some fun inherent in abusing custom spell creation, but it's best for the gameplay. Or, maybe the custom spell creation could just have some more reasonable limitations for certain spell effects - I'd like spell creation to be as fun and versatile as possible, just don't want that versatility to be as imbalancing as it was in previous games.
#5. Potion drinking needs to be an action.
This has been suggested many times, and it would really help game balance as well as make combat more realistic and challenging. Alchemy isn't quite the same as spell casting but I'm lumping it in here with other magic concerns anyway. Being able to instantly save yourself by chugging powerful potions without any risk is cheesy. Trying to pull out a bottle of something and swig it in combat should involve some risk, some exposure, some chance of failure if you're struck while in the process.