It is an action RPG FPP... a comparison that which people compare a couple of games it this:
"Oblivion is Fallout 3 without the guns" (without VATS)
"Fallout 3 is oblivion with guns" (with VATS)
Apart from that Oblivion has a bigger map, more areas, custom weapons (such as enchanting a Steel Longsowrd with fire damage), custom spells within spell schools (although the ability has to be unlocked , you can buy spells within stores), loads of enemies, a decent combat system and so many goddamn quests that you wondered how they fit it all on a disc.
Seriously. I've clocked over 200 hours with over a dozen characters and I am STILL finding new things. I have all the achievement yet I am STILL playing it because it is so much fun.
As for the story, you will find that you will be doing so much other things that you might not even touch it until you are level 20+, there is no time limit and Bestheda encourages exploring. You can be doing the main quest and see a cave and go "Fuck it, I'm killing everything inside and looting it." and 90% of the time there is a good chest at the end with decent levelled equipment.
Plus all the factions have their own stories to them. Dark Brotherhood (Assassin), Thieves guild, Fighter's Guild, Mage's Guild, Main Story, Shivering Isles (comes with the Game Of The Year Edition), Knights of the Nine (Comes with GOTY Edition) and everything else.
Levelling up is not raised by experience, but by a modified Final Fantasy 2 system. The more you use a skill, the better you get at it. You choose 7 (or
main skills and every time you level ten of them you rest then level up (any combination, so you can level Alchemy 10 times and level up or level all the main skills, two twice and level up). You get bonuses to your stats on level-up depending on what you developed (up to +5, but you can play the whole game with +2 and still have a great character).