It's absolutely leveling, walking speed being a stat, spell customization, NPC interaction, bartering, quest interconnectivity, and especially, exploring.

This sort of comes down to the classic debate of "Depth vs Quality of Life". To quote Steak Bently in his excellent video essay on Metal Gear Solid 4:

Depth of game play, to boil it down, is usually defined by the number of ways a player can approach any given scenario. More tools with more unique properties. More hardcore players tend to value depth more and consider additional depth to be generally how you measure improvement in game play.

But more casual players value ease of play and think additional depth and challenge at the cost of accessibility is more of a downgrade. Hence why the general public considers Bayonetta 2 a straight upgrade from Bayonetta 1, but the crazy combo junkies don't like it as much.

Morrowind's mechanics have a level of depth that vastly exceeds Skyrim's in almost every conceivable way, but is often referred to as "janky" and "clunky". Skyrim's mechanics are far more intuitive accessible, but is often referred to as "shallow as a puddle". Which of these you prefer will largely dictate which game you think has the "better" mechanics.