Indeed, especially in an open world like the Elder Scrolls, the point of exploring is totally ruined if there's nothing to explore since instead of finding easy areas and hard areas, and exiting new dungeons, all was hand-tailored for your level.
No exiting "what's in this lair" when you already know anyway.
Gone went the exploration fun, motivation, and then entire game with that. And I bougth the CE based on Morrowind. What a loss of money that turned out to be...
I also know another example. KOTOR1 has a finite 20 levels, and used pre-set enemies. They could be replaced by a higher type of the same enemy (including other name of course) if you were high (to allow you to do 4 levels in your own order), but only very few distinct enemies had that, most were fixed. But quite obviously the first was harder than your 4th. And that's good.
The game was easy.
Then came along KOTOR2, who stretched it to lvl 50 (even though one only reaches 30 realistically), and instead of handcrafted NPC's used levelscaling.
There is no challenge in the game, at all. The enemies are completely underpowered to the player simply cause the "add this based on level" isn't enough to compensate for the progression of the players power.
Dragon Age: Origins uses level scaling too. This resulted in aforementioned super-HP-bloated enemies to 'compensate' for the player. Again; No fun in combat was to be had.
The Old Republic introduced some events, encounters and such which scale, so all players could join said event. The result is usually;
* It scales to highest level of your party. Are you below it; feel free to twidle your thumbs as you cannot damage it.
* If equal level, it's not terribly challenging but boy, does it take a long time before enemies go down. Fun, it's not there.
* Let a lower level player spawn it, then kill it. Definitely the most fun, since you're not spending who-knows-how-long on repetitive content.
Now I have to say TOR's combat and system in general is horrible anyway (it's a MMO, what do you expect), but atleast finite levels was a lot more fun. The scaled content is just horribly, finding teams a nightmare since you get all level people there, and most low-level people just use a high-level friend to get them along. And they can, since it's horrible designed.
The designers say 'allow everyone to play this content due to level scaling' and I said 'you know what, forget this game' since everything that came out after that decision was just so mind-dumbing bad I didn't feel like playing no more. I suppose I should be glad they freed me from the clutches of MMO exactly by making me think 'what the hell am I doing, really?' something tht wasn't even daunting me by grinding max level content, but definitely hit home then...