In other words, players are free to make virtually any sort of character they wish, and to change the direction their character is developing at any point during the game. After playing for a time the player realizes that not traveling with Companions can leave a warrior dreadfully outnumbered in a fight. Perhaps the player begins advancing the character's Stealth skill so that she can better sneak past large groups of enemies, or Summoning magic so that she can conjure up allies to temporarily aid her in battle. A higher strength allows a character to hit harder, carry more, and wield heavier weapons and armor.
Luck affects everything in one way or another.
Of the non-derived statistics, Race is especially important. Story-related effects include things like certain items, quests, events, and Companions being available or unavailable based on the character's race.