Open Cities Classic is a comprehensive project that aims to bring back at least part of the feel of Morrowind - specifically with how most of the cities were a natural part of the world and you could just walk in without loading screens. The added immersion and realism goes a long way, probably a lot more than you might think. Ever wanted to ride your horse into the center of Cheydinhal? Well now you can. Need to get some help from the city guards to vanquish a foe? Run toward the gates and the guards will do their duty while you can seek safety within the walls. The town guards make for some very interesting interactions this way.
The only cities not covered by this project are Kvatch and the Imperial City's central districts. Kvatch has too much main quest material setup in very specific ways to mess with it, and the Imperial City is simply too large and unwieldy to properly open up.
Highly recommended complimentary mod: Animated Window Lighting System and Chimneys - This is the evolution of Texian's Window Lighting System and is fully compatible with Open Cities.
To go with that, and provide LOD for all the new goodies, I also recommend: Really AEVWD. Just be aware that there's a bit of a performance hit in activating all the extra LOD that Open Cities will provide that's directly proportional to the power of your PC, and how many other mods you have installed.