This means OR is not a mod (an addition) but it is a real upgrade of the game to a new version and it uses the settings taken from the esm/esp mods like the original game does. The main difference between OR and other plugins/mods is that OR is an extension/patch of the game.
It can be called a mod, but it is not a 'normal' mod but a real 'code patch' and it upgrades Oblivion to a new version: 'forget' the old Oblivion's guides and settings to use OR. In addition, it has a lot of features, improves several other things and fixes some game's bugs. Oblivion Reloaded changes the vanilla shaders and supports several built-in effects, but it has also a custom engine to support any new own effect. OR has been totally re-written to go over the OBGE limitations, removing also the retro compatibility. This project begins where Oblivion Graphics Extender (OBGE) left off, implementing a series of new features and removing limitations that no longer make sense. Oblivion Reloaded is an OBSE plugin that mainly modifies the rendering pipeline, adding new features and providing screen effects not supported in vanilla Oblivion. Whether you are a veteran modder or a newbie, OR makes significant changes to Oblivion's rendering engine and adds several configurable options.
