When you reach high enough level, every bandit will have 1000000 gold piece of equipment on them. So you're stronger relative to how strong you were before you rested and lvld up, but are now in a world where every single being is now stronger than you were before you rested. Its like you're stronger than you were before, but everything else in the world is also just as strong as you just got. Since EVERYTHING also becomes stronger, you're basically just as you always were. So in fact, you might think that you're getting stronger, but nope.
So every single living being also gets stronger. But as soon as you level up, the whole world also levels up. Because everyone is weak enough that can be defeated by a pathetic lvl 1. At first, the world is super weak, and you could travel the land and clear every single cave, ruin, oblivion gate, without seeing anyone you could not kill. In Oblivion, your character is the center of the universe. When you get stronger, the WHOLE WORLD also gets stronger. Its the way the retarded vanilla Oblivion game works.
