Without doubt, magic is the very heart and soul of Daggerfall and, in my not-so-humble opinion, the item-maker is the most powerful feature of the game. In fact, this feature is so powerful that it is quite easy for a player to stack the odds in his favor and thus distort the player's abilities to the point where the game becomes a walk in the park. This is especially true at higher levels with spell effects tied to the caster's level.

To give credit to the game development team, they understood how powerful this feature was and took steps to limit its effects. For example, the player may only equip a limited number of items, those items can only hold a limited number of effects and they can only be had by players with both access to the item-maker AND the requisite amount of money (typically 10 GP per EP).  Midnight Adventurerís Supply and the Rusty Ogre Lodge pretty much removed the money restriction. Some judicious spell casting and doing/redoing a couple of easy quests takes care of the access problem, even for a 1st or 2nd level character (yes, I've been a 1st level Archmage). And now your character has the potential to become a veritable demigod at will (and that's not counting "cheat mode"). Beware of making the game too easy!

Magic item effects come in a lot of different flavors, but they boil down to about three general kinds. There are effects that make you better at what you do (like attribute and skill-enhancing effects), there are effects that allow you to do something you wouldn't normally be able to do (like additional magica points, spells that you couldn't normally cast or fixing items that you can't repair), and there are effects that simply make it easier for you to survive (like absorbing spells, regenerating health points, stronger armor, etc.). If you think of enchanted items as tools, then the process of creating tools is determined by how you plan to use the tool. In other words, what problem are you trying to fix?

Dealing with Hostile Magic: in the area of dealing with hostile magic, you have three choices. You can endure it, avoid it, or use it. To endure it, you either need resistance (Resist Fire, Resist Frost, etc.) or lots of health points (Heal). Avoiding it is most easily done at the character generation stage with class resistances or immunities, but illusion-type effects (Invisibility, for example) can help you by decreasing the chances that spells will be tossed at you in the first place and successful "Far Silence" effects force hostile magic-users to fall back on melee rather than ranged magic. Using hostile magic means either absorbing it (Spell Absorption) or reflecting it back on the caster (Spell Reflection or Shalidor's Mirror). In the area of using hostile magic to your advantage, Spell Absorption can be dangerous. The effect is iffy at best and absorbing magic when your magica reserves are full can kill you. If you are going to rely on absorbing spells as a defensive measure, couple the effect with "Extra Spell Points Near <critter type>". When you get near the type of critter in question, your magica capacity will increase to allow room for the absorption to work. When you are out of range or the critter has gone to the happy hunting grounds, your magica will return to normal levels.

Dealing with Damage: same idea. Endure it or avoid it. If you have Namiraís Ring you can use the damage against the critter (sometimes), but it doesn't work against humans or animals and is only half effective against Daedra. To endure damage, effects such as "Shield" are helpful and "Heal" is a must-have. "Vampiric Effect When Strikes" lets you regain points (hopefully) quicker than you lose them and "Regenerate" or "Troll's Blood" lets you speed up the healing process while you're wandering around. Avoiding damage goes back to either avoiding the critters that hit you (illusion-type effects), making it harder for critters to hit ("Strengthens Armor" and "Enhances Skill: Dodging"), or "doing unto others before they can do unto you" (ranged offensive spells or Enhances Skill: Archery).

Dealing with Hostile Critters: avoid them or take them out before they take you out. Avoiding goes back to illusion-type effects and being sneaky. It was intended that the "Wizard Lock" effect would help keep hostile critters safely out of the way, but I haven't found that it works very well. In fact, it usually has the opposite effect: try to wizard lock one door and you wind up locking ALL doors. Great for the lockpicking skill; lousy for anything else. This is the area where players are tempted to load up on attribute-enhancing items. Because of the problems already mentioned with these items, I recommend using them only when you find yourself overmatched.

The key is to remember that the development team did not set up the game conditions for the player to lose (no one wants to buy a game they can't win -- a few really weird people excepted). By the same token, an easy win is OK once in a while, but gamers generally like a challenge. So the game parameters are set up to where the average character will have a somewhat difficult, but not impossible time in achieving his/her objective. That is why human critters generally equal your own level. The fighter that you encounter has a more or less equal probability of hitting you as you do of hitting him and inflicting a more or less equal amount of damage. And since they are about equal to you in level and are canned classes, they are going to be about as tough to kill as you are. The big difference is that their use of magic tends to restrict itself to offensive uses (they're supposed to die, remember?).

Dealing with Hostile Environments: four spell effects take care of just about everything you will ever encounter in this area: water breathing, water walking, levitate and open. Get some and use them with impunity.