It's true that is a big part of what makes those different. Truth is initially it's a design shift Bethsoft made out of convenience for themselves, not for the players.

They explained why they did it like that on Oblivion. Basically, while a lot more immersive, Morrowind's actual quest directions were kind of pain during development. Regularly, a quest objective would be adjusted and moved somewhere else, and they had to track down all related dialogues and logs to correct them. In fact, a few quest logs still have incorrect informations in the final game (e.g. west instead of east!).

The problem was made a lot worse with Oblivion since all dialogues now had voice acting. It was not possible for them to record voice lines again when they changed stuff, and I guess even if they got it right the first time, how many more lines would just be "follow that road, turn there, second door to your right" whatever? Oblivion was already an incredible feat of voiced dialogue back then, this is surely one of the corners they had to cut (in general, dialogue was made a lot simpler than it was in Morrowind).

For better or worse, that's the real reason for the compass and quest markers.