Opinions are mixed as always. "Rose-tinted glasses" may overlook some faults out of nostalgia (ie, focus on happy memories of playing such an open-world game for the first time after a stream of 90's linear FPS's vs technical issues). OTOH, if this is your first time playing you will be obviously more critical of it vs release as you'll be unfairly subconsciously judging a 2002 game by 2012-2017 standards.
"Rose-tinted glasses" aside, it's still widely liked because it isn't dumbed down. There's no giant arrow pointing you where to go, you have to listen to instructions. One of the saddest things about Oblivion's hand-holding was it was a "response" to
"I don't know what to do" of the first mission in Morrowind (suffered only by those not listening during the intro). There was no enemy level scaling - if you insisted on entering a "difficult" cave, too bad. Oblivion onwards tended to over-compensate on making every enemy exactly match your level no matter how much you levelled up. As for it ageing, all +15 year old games age, but it's more than playable as are many other early 2000's games, especially with a large modding community behind it. It's an Elder Scrolls game, which means both mods are a necessity and it'll always be "part-quirky" but once modded,
it looks pretty good for a 2002 game, especially if you're comparing it to 9 years newer
cr*p like DA2.
Some aspects of the Morrowind -> Oblivion -> Skyrim 'evolution' were improved. Eg, removing Medium armor and streamlining a few of the skills didn't bother me. Visibly flagging stolen items in the inventory was another welcome improvement. Others were downgraded (eg, the non SkyUI / DarnifiedUI modded stock Oblivion / Skyrim UI is fugly as hell consolization on a PC). Likewise, I found Morrowind highly atmospheric because you were in Dunmer-land, and treated with far more suspicion and hostility if not playing as a Dark Elf vs playing as a non-Imperial in Oblivion / non-Nord in Skyrim. Likewise, some Morrowind villages looked and felt really different as a culture in different geographical regions, eg,
Tel Branora Telvanni architecture vs
Vivec's canals vs the normal "generic Elder Scrolls stone houses". In Oblivion most diversity had to be modded in (Unique Landscapes) and much of that architectural diversity vanished in Skyrim where a house is a house is a house... And yes, that soundtrack is just magical.
Like all games, it has its goods and its bads, and compared to what it brought at the time vs almost entirely linear games only a few years older, no it really wasn't overrated for what it tried (and mostly succeeded) in doing. The only real problem for 2002 released games is that the late 90's / early 2000's were such damn fine years for games releases...