Some please explain. I just hope to god the loot doesn't work like it did in oblivion.

Loot is fixed, imagine this threads exlanations but with areas http://www.gamesas.com/index.php?/topic/1251038-how-dungeons-work/

Ex: the starting area will have petty loot, while other parts will have better loot.

Okay thank you!! That's a relief

it will be scaled and hand placed items, like Oblivion and Morrowind. Yes Morrowind had leveled loot, it was just kinda rare. The loot system will be pretty much like fallout so you can look at that to get an idea