Archery is better since you can collect misfired arrows as well as reliably connect with sneak attacks. Indeed, I'd argue that consistent sneak attacking is the primary benefit of Oblivion's 'always hit' combat. Magic is better insofar as quick casting allows hybrid classes to function more effectively and magicka regeneration lets you use it more easily as your primary method of dealing damage, but there are less available spell effects and therefore less imaginative combinations available to the player. The lack of slowfall/jump/levitate also ends up making dungeons far more boring, since they're all navigable by every type of player and there's never any sort of roadblock that can stop you from being able to progress. Well, I guess there's one or two grottos that might require waterbreathing. Morrowind never really took advantage of this either, to be fair.
Playing Skyrim as a sneaky elf who one-shotted everything from a mile away with perfect arrow shots was pretty fun. I mean absolutely broken and not really "RPG-y" at all, but kinda fun. Wears thin eventually though of course. I also made a spells in one hand and short sword in the other character, which was much more boring due to how the enemies barely react to being hit. The fun of making your own wacky spells, as you describe, was mostly removed iirc.