There are two ways to design the game that are equally valid. First, you can balance the difficulty on the assumption that people will regen health and enter each battle with full life. This is what Bethesda chose. The second is to remove health regeneration and balance the game on the assumption that people will complete an entire dungeon before restoring their health.
It's much harder to balance the game on the second theory without making Restoration and/or Alchemy either essential or overpowered. They would need to add further restrictions, such as a much smaller carrying capactiy that limits the number of potions you can bring and either a limited magicka pool to prevent Restoration spam or some restriction that prevents casting Restoration spells inside a dungeon.
Bethesda chose versatility and freedom over "realism." Especially since a non-regenerating health pool isn't much more realistic than a regenerating one.
Do not understand everybody has healing spell and it's lots of healing potions.
In Oblivion you simply selected heal minor wounds and cast it to you was out of mana, moved on and repeated casting then it restored . Potions if you feared more enemies up front or in combat.
In Morrowind the heal on use magic items was essential. As somebody say the 1health/second permanent enchant was nice.
In Oblivion I made an character who could not cast magic at all, silence effect as racial bonus.
I gave her an ring with an script who restored 10health every minute to avoid having drinking potions for minor injuries.