In Oblivion, your character's progression is driven by Attributes and Skills. There are eight primary Attributes: Strength, Intelligence, Willpower, Agility, Speed, Endurance, Personality, and Luck. Each attribute governs the effectiveness of several related skills. For example, Strength influences your melee damage and carrying capacity, while Intelligence affects your Magicka pool. When you level up, you gain three points to distribute among your attributes, with bonuses determined by how much you've improved related skills since your last level.
Skills, on the other hand, represent your proficiency in various actions. There are 21 skills, divided into Combat, Magic, and Stealth categories. Using a skill (e.g., casting a Destruction spell, swinging a Blade weapon, picking a lock) increases its proficiency. As skills improve, you unlock new perks and become more effective in that area. Your seven Major Skills contribute directly to your character's overall level. Understanding the interplay between attributes and skills is key to optimizing your character's growth and creating a powerful build.