Tes4Mod:Mod Complexity

Information Overload
If you're new to using mods on Oblivion, you're likely to find yourself shocked and dismayed at how darned complicated the whole process can be. Consider:
There are tens of thousands of mods.
Simply installing some of these mods is a fairly complicated procedure.
Some mods require the installation of other mods and/or mod tools.
After installing, many mods (especially the popular large overhauls) conflict with each other. Resolving these conflicts is a puzzle solving exercise.
There are two major mod player tools (OBMM and Wrye Bash), both of which are quite complex. Plus a number of smaller which are still quite complex to use.
Many mods have bugs in them. Some of these are repaired over time. Others are abandoned and left un-repaired. Worse, since new mods are still being created, and since the major mods are still being updated, new bugs appear on a regular basis.
While a fair amount of knowledge has been developed in dealing with these problems, that knowledge is scattered across multiple wikis, multiple forums and multiple topics within different forums.

Choice Complications
The most obvious source of complications in Oblivion is simply the number of choices. With tens of thousands of mods to choose from, and up to about 250 of those being runable at any one time, there are obviously a lot of variations on the way the Oblivion "world" can be constructed.

Oblivion also allows wildly different ways in which the game can be modded. Mods can do something as simple as tweak the speed at which arrows fly. Or do something moderately complicated, like change the face of every npc in the game. Or do something extremely complicated like completely overhaul the leveling structure of the entire game, introduced new npcs, new dungeons, new rewards, new factions, etc.

Conflict Complications
Conflicts, understanding them and using tools to resolve them, are probably the major source of complexity in using mods in Oblivion. E.g. just understanding why two mods that add eyes will conflict with each other takes a bit of studying. Understanding not only that, but how to use Wrye Bash to resolve that conflict, and more why even Wrye Bash still can't resolve all conflicts requires even more reading. 

And keep in mind that for many problems there's not program that tells you that there is a problem. Instead you encounter mysterious behavior (NPCs without right eyes) or equally mysterious CTDs. Often, just figuring out that there's a problem and roughly which mods are involved is fairly difficult.

Integration Complications
In contrast to conflict complications are integration complications -- i.e. complications that arise from mods that are made to work together. Creating mods that are designed to work together of course at least doubles the installation difficulty and also raises the possibility of synchronization errors, in which one mod of a co-operating pair of mods depends on an older or newer version of the other mod than the user currently has installed.

(So why do integration? Because the benefits outweigh the costs. E.g. using a Cobl based house mod also requires that you install Cobl. But by building on top of Cobl, the house mod is able to provide some items that otherwise would be too complicated for the modder to include.)

Tool Complications
Programming tools for Oblivion are very powerful: they repair broken savegames, help manage complex installations, reconcile major mods, etc. Unfortunately, the addition of these tools makes for a more complex situation. I.e. now not only do you have to install Oblivion and the mods, but you also have to install and learn to use the tools, which are themselves complex.

Some Perspective
For many players, installing Oblivion with a large set of mods will be the most complicated thing they've ever done with software. While this can be frustrating, two things should be kept in mind: 
# The various mods and tools vastly extend and improve the oblivion world.
# The work is done by hobbyists who release the results for free. If this sort of work were done commercially, it would cost the hundreds of thousands of dollars (or more likely, millions of dollars). 

If you still find yourself daunted, keep in mind:
Start small. As with many things in life (and gaming), you need to work up to the more complicated stuff.
Have fun! If it seems too complicated, then do without.