It's common parlance to say 'break' in Oblivion when your sword reaches 0 health. It's not actually broken permanently, it can be repaired, but it is unequipped and useless until you repair it.
It was never broke per say, but so dull that it was useless was more how I thought about it. However, armor was something that I considered to be broken when it was at 0%.
Fully agreed. I'd like to see some kind of field work for simple things (for all crafting), but also include some kind of corrosion which would take some time and effort or money to get fixed at smiths. Like, slowly degrading the equipment (based on environment?
Maybe not corrosion. However, let's look at sharpening. Swords, or any blade, is heat treated in the area that is sharpened, but not on other parts of the blade. This leaves the blade flexible or rather, not brittle, but the area that is sharp can hold an edge. Once you sharped the blade enough, the metal that is heat treated is worn away. It needs to be heat treated again on the edge to be able to hold a sharp edge.