Elder Scrolls IV: Oblivion Q&A
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Q: How big will the world of Oblivion be, and what kind of things will you be free to do?
A: The explorable world is roughly 16 square miles, though the number itself becomes relatively meaningless when you're walking around in the game. Suffice it to say that the world is monstrously big. The landscape varies from grassy plains to craggy mountains to thick temperate forests. It's great fun to take a break from questing and run off to pillage a dungeon or simply wander and enjoy the incredible scenery.
There are quite a few quests to do that you won't find by strictly following the plot line. And of course, there are a tremendous amount of cool locations to discover out in the wilderness. Ultimately you're free to do anything whenever you want. Move between different faction quests, fight in the Arena, buy stuff for your house (or houses), steal stuff, kill things... whatever you want, whenever you want.