I know from a long term Elder Scrolls player standpoint it makes perfect sense to be able to have your character grow based on what you make him do. But here's my concerns with it being implemented into an MMO.

From the way I see it, this system will work in one of two ways:
1) You get points as you gain experience and can put them into what you want, then you can no longer spend points upon reaching maximum level (Which is 50, if I recall correctly.)

2) Everyone can maximize skills in whatever they want at any time, just like previous TES games.

Both of these designs give me great worries. With type 1 you have to worry about maximizing the efficiency of your role, this is inevitable in any competitive PvP or Raiding system. So say I make a healer, but I make a few dumb decisions choosing what I spend my points. Now my character isn't as efficient as it could be, which could hinder my raiding experience or even worse, ruin my chances to get into a raid. The only possible solution to that is to have a system like World of Warcraft's specialization talent tree, where you go spend money to have it reset and put your points in the right places. Then another problem arises, because any ranger character can spend a few gold and immediately become a powerful wizard. This causes community problems, because if everyone can suddenly become any role they want they become much less dependent on other players.

Then there's type 2. Where I can maximize everything after a long play time and then switching roles is purely a matter of obtaining the necessary armor. This brings us right back to the problem with type 1, where there's community issues because everyone can take on any role themselves.

Out of all the concerns I have with ESO, this is by far the greatest, and could very easily be a game breaker. Is there any more in depth information on how character advancement works? Or is it just going to be worry until beta is released?

There will be classes in TESO, the skills will just be picked differently and not as linear as to other class systems for MMO's.

Watch these vids especially the second one.

http://www.gameinformer.com/b/features/archive/2012/05/29/the-tactical-combat-of-the-elder-scrolls-online.aspx

Are you able to reroll your class at will / respec penalty or are your decisions for a character set in stone? Hoping it is the latter.

I had heard that the classes were more just like starting stats to choose and that at max level you could end up with something entirely different from what you started with. From what you're describing, it sounds more like a class and specialization system like WoW does. How much exactly do these 'skills' make up what your character does?