Started a charachter that actually uses archery, and I've been having some issues with aiming. I remember in Oblivion you actually had to aim slightly above a far away target so as to allow for ballistics. In Skyrim it seemed like I just always missed when I did this. After a little while playing around with my aim I noticed that shooting the arrow resulted in it arching slightly, even when shot straight ahead. So my question is: does Skyrim auto-compensate for ballistics, or am I missing something?

It appears to adjust for Ballistics, or, there are no Ballistics and the Animation just has a ballistic trajectory.

In fact, I find I need to aim a bit lower than I normally would, but that could be just me and my chair/monitor/bent neck.

Oblivion archery arced too much, to the point where it wasn't really a feasible means of playing the game.

This time, the arc isn't nearly so bad, and you only have to adjust your aim up a tiny little bit.

If you are shooting from an extreme distance, arrows can occasionally pass right through targets. I've wasted dozens of arrows on wolves trying to perfect my shot only to find that out later.

That is because, despite archery actually being the best way of damage-dealing in Skyrim..... the game was designed with running up and hitting things with axes / swords in mind.
Because Bethesda got tired of putting effort into their games, and decided what we really needed was some really generic "Hit Dragons With Swords" action, like every other fantasy game in the freakin Universe. The ability to take things out from range was just an afterthought.... and past a certain point, it is assumed that you won't be trying to attack something because it is too far away (i.e. because you're not close enough to hit the dragon with the sword).

Yes, I'm quite sure that's what happened.

Your character aims slightly upwards naturally. So archery in this game is sort of like shooting a gun, oddly enough. You have to know where your zero is.