Oblivion is a great game, there's no doubt about that. However, after hundreds, maybe even thousands of hours, it can become a bit stale. This is where user-made Plugins, or 'Mods', come into play. User Mods (can also be referred to as 'Unofficial Plugins'), are user created game content designed to add to, or modify the game with content not originally found withing the game. Usually, the content is something that was not originally in the game; or it could be a fix or extension of an already existing item. These user created modifications can range from anything from a new quest or guild, to an entirely new leveling system. There is, quite literally, no limit to what you can do to your game. So now you're probably thinking, 'Well what's the catch?' - Read on.
Of course, given how fragile Oblivion is at the best of times, the more Mods you add, and the more complex they are, the more problems you'll run into. It's a trade-off between making your game exactly how you want it, to it being riddled with bugs and errors, which can range from a missing mesh or texture, to the apocalypse of the gaming world (or at least that's what it feels like!). However, there is a strong reason for attempting to use these mods; without them, interest in a game may dry up sooner than it otherwise would. It adds an extra reason for a user to purchase the game (in the case of Morrowind and Oblivion, the possibility of the user purchasing both a console and PC version of the game).
Fortunately, in order to combat the negatives, the The Elder Scrolls fan community has been hard at work since its release, and now a multitude of tools are available to make your life easier. Using them, you can ensure that your mods are properly installed and cleaned. They do not, however, get rid of every single possible chance of an error occurring. That's mostly down to how careful you are when installing. If you rush around and install hundreds of Mods when you're just starting, well, you're bound to run into some errors. Take your time, the Mods won't suddenly disappear over night.
If, after reading this, you do decide that you want to use Mods, remember one thing: BACK UP YOUR OBLIVION FOLDER. It's, what, 4-5GB? Pack it into a RAR or 7Z archive to make it even smaller if you want, just make sure you do it. Even place it on an external hard-drive if you have to. If anything ever goes completely wrong with your game, at least you know that you don't have to reinstall it from scratch. You can replace any corrupt data files, grab the original BSAs, see the file structure if you don't know where a particular file goes. Honestly, it's practically mandatory to do this.
Always remember, unofficial user-made modifications are to be used at your own risk!
Pluggy - This is an extender for the original OBSE linked above. Some Mods require it. Remember to download the latest version!
 Downloading Mods
There are two main websites used to download Mods, PlanetElderScrolls and TESNexus. They're both relatively the same quality wise, with many of the same Mods appearing on both sites. However, it's recommended that you use both, as Modders will sometimes only upload their Mods to one of them, so you'd probably be missing out if you didn't.
Now, generally, the more well known and liked the Mod is, the higher its quality. That's a very bold and rash decision to make, but for new Mod users, it's the safest option. You may very well come upon a Mod sat lonely in a corner, with no endorsements or votes, and it's the best thing since sliced bread, but by the same token, you may also try one of these 'less known' Mods and find it causes glaring errors in your game. It's just advice, you don't have to take it, but do be weary when downloading any Mod. Here's some tips on how to check if it's (relatively) safe to use or not.
Always look at the comments! How many endorsements or votes a Mod has is good for a quick first-impression, but to really see how good it is, check what other people think of it. If it's got a lot of bad feedback, it's probably best to stay away. If, on the other hand, it has good feedback, give it a try! If opinions are split, you'll have to balance how important the Mod is to you personally. You could try it, and uninstall it if you like. But if it's heavily loaded with meshes, texture, and the like, it could cause serious damage to your game if you aren't careful.
All in all, just be cautious. The game is, after all, yours. If a Mod has zero votes and everyone's saying it's terrible, you still may like it. If it's in the Hall of Fame and everyone's bowing before it, you may hate it. Take it slow when starting out, stick to the smaller well-known Mods, and then branch out when you get more comfortable with the process. If you have any questions about a particular Mod, don't be afraid to ask on the Official Bethesda Forums. The members there know their stuff!
 Mod Installation Guide
The following guide includes the correct ways to install Mods as well as some safety tips and best practices.
Please, please, don't just download Mods and leave them laying around on your desktop! Really, you have to organize yourself if you're going to thoroughly Mod your game, or else you'll lose track of everything and end starting over. A great way that I personally find to organize downloads relating to TES Mods is to create a specific folder for each type of download.
I think screenshots can explain this better than words, so take a look at my layout for a second:
As you can see, I have separate folders for my Mods, Utilities, Misc. files, etc. You'll also notice that I've made shortcuts to each of the various tools, so I don't have to track them down in order to use them. They're all safely accessible from one spot. Of course, you might prefer a different layout to what I have, but at least you get the basic idea. I find that the better you organize yourself before-hand, the less problems you'll run into when it really gets going.
[This section still needs a whole lot of work, I'm just not sure how to explain it properly. Maybe someone with better word use could help here? Can we upload the images directly to the wiki?]
 Installing Mods
Guide on how to install Mods using OBMM, with advice on reading the Readme's and etc. Maybe add a manual installation guide (Without the use of OBMM) later? For those who don't like to use 3rd Party utilities?]
 Cleaning Mods
[Description of the process needed to clean the .esp / .esm files in TES4View/ TES4Edit. Advice on backing up files before hand an etc. in-case something goes wrong. Or maybe that advice should be mentioned at the top of the page?]
 Load Order
Before doing anything with BOSS, launch Wrye Bash for the first time. You'll be greeted with a pop-up asking you if you would like to disable the feature 'Lock Times'. Do so, and then close Wrye Bash - do NOTHING else with the utility until the next section.
Now, after you have successfully installed BOSS, and updated the masterlist [explain about the masterlist and the best way to keep updated], launch the .bat file and the utility will automatically adjust load order for you. Any unrecognized Mods will appear at the end of the text file, and you should report them to the latest Official BOSS Thread
[Obvious touch-ups needed]
[Still need a few guidelines on where, generally, certain types of Mods should go. Again, it would benefit those that don't wish to use BOSS.]
 Wrye Bash Guide
[Explain general features such as Lock Times, Balo and etc. Their pros and cons and all that]
[Guide on how to use Wrye Bash's 'Bashed_Patch' feature to allow greater compatibility between Mods. Also, quick guide on updating the maters to avoid in-game problems. Updating Saved-Games should also go here.]
 Distant Land Generation
TES4LODGen is probably one of the easiest tools you'll ever run across. Unzip the downloaded archive to any folder you wish, and run the program. It will automatically find your '/Data' folder, and begin creating the necessary files. Once it tells you it's finished, close the program and launch Oblivion. Simple.
 Official Support
The brains behind the phenomenon, Bethesda Softworks actually encourages user modding. In fact, they released the tool used to create the Elder Scrolls universes The Elder Scrolls IV: Oblivion and The Elder Scrolls III: Morrowind known as The Elder Scrolls Construction Set
Thus far, only the PC versions are supported, and there is no indication that console versions of the currently available Elder Scrolls games will ever receive similar support, and nor has there been any indication that future console versions of Elder Scroll games will receive such support.
 Wiki Staff Shout-Out
A special thanks to Robot Hive for the idea and will to make and detail this page so that newbies have a place to find quick and easy answers on this subject. And also thanks to tallteen86 for contributing a lot of information to the original User Mods page that has now been decommissioned. Thanks guys!