The Elder Scrolls Construction Set is the very same editor the developer's use to make the game (in conjunction with a few other outside programs). The CS that will ship with Oblivion will feel very familiar to anyone used to doing Morrowind modding. It will ship only with the PC version of Oblivion. Here is a list of improvements to some of the different area's of the CS.

General
Can change the skill names, what their governing attributes are, and how much they advance with usage. Can also manipulate all of the game's formulas by modifying the constants used within them.

> Able change all of the text in the game using the TESCS. None of it is hard-coded, though this does make it tough to localize.
> Some changes to the overall flow, and how data gets laid out, but the basics of being able to just grab any object and drag it into the world remains the same.
> They've polished the Editor to make it faster to implement quests and content.
> Yes, the region editor & terrain generator tools come with the PC version of Oblivion. They're all part of the Elder Scrolls Construction Set.
> Players have the ability to construct their own worlds completely separate in every way from the main world of Oblivion. Though there are theoretical and practical limits to the size of the world you can create, the ability for modders to create worlds several times the size of Cyrodiil is there.
> The version of 3ds Max that we use (both character artists and world artists) is 5.1

Interface/Look
An all in general improvement to the interface making the CS easier to use

Landscaping
The landscape tools allow you to do large-scale land generation procedurally. You pick an area, set up your parameters such as what types of objects you want, how close together you want them, and about a hundred other options, and hit Generate. If you want, you can go in and tweak the result by hand, or set up your options again and re-generate.

> It lets you generate the landscape, raise & lower areas, and specify how much erosion has taken place, so areas can be naturally smooth or jagged.
> In addition, there's a region editor that lets you define areas that have probabilities set up for various types of trees, shrubs, rocks, etc., and you press the "generate" button and the areas are generated. Artists can go through and refine the areas by hand as required, but time is saved by them not having to place every single tree, rock, shrub or fallen log by hand.
> Soil erosion and random placement of trees & such doesn't happen in-game. It happens in the CS. As far as erosion goes, that happens when the terrain is generated.
> All the random generation happens in the editor -- so everyone's Tamriel is the same as everyone else's.

Quests/Dialogue
Quests are now very easy to set up and manipulate.

> Total rework on the way dialogue is constructed so that everything is organized by quest.
> Much more flexible and powerful dialogue (with built-in voice recording and automatic lip synch data generation).
> The program lip-synchs new files automatically.

NPC's
Ability to give NPC's schedules easily (outside of scripting)
> Asign unique dialog to each NPC

Objects/Physics
A lot of object-oriented concepts were implemented that I know Modders will go crazy over it. We tried not to hard-code anything, so that you can create your own custom spells, spell effects, quests, characters, races, etc?it?s all customizable.

> One new feature that just went in an Effect Shader object. Modders can create their own custom magic effects, using different parameters and settings. Think the fire damage effects fade in too quickly? Want to add more particles to the effect? It?s all adjustable via the Editor, with no programming needed.
> Every object in the game has their own defined physics so players can just drop an item into the world and whether it's made of metal or wood or cloth, it will react properly. Then proper textures can be painted on, making a world that looks just as good as Bethesda's own.
> The physics properties of objects are set in the art file, but we do have manipulation tools in the editor so you can stack or lean objects with physics active ? so you?ll know exactly how they?ll act in the game.

Scripting
All-in-all, the scripting will be very simliar to that in the Morrowind CS. Some updates to scripting have been included though.

> Variables can be used as parameters for most function calls
> if statements can use the full range of logical operators: &&, 7C7C, >, !=, etc., as well as nested parens
> Ability to call functions on any reference anywhere
> Integration of script functions with "conditions" in the editor -- basically, any function that returns a value will be available to conditionalize dialogue, etc.

Though some things are unlikely to be added in this time around.
> string variables
> arrays
> lists
> pointer variables

According to Maturin, the language is unlikely to be revised at this point in development. Functions on the other hand are easily added, so there might many more of these to come. Also, scripting is no longer used to control AI. The CS will have it's own section that you use to give quite sophisticated behaviour to NPC's.

Screens