It definitely felt magical when it was new, but I think that's just a feeling. Skyrim has Radiant AI and things like NPCs taking over establishments when the owner dies. A number of dynamic behaviors which help things feel a bit more alive.
I can't remember Morrowind having any kind of dynamic behavior or emergent gameplay. Unless you count being able to lock yourself out of quests by killing important characters (including as part of other quest lines!) which is something I do miss.