I had tried playing Daggerfall a couple of times in the past.
Everytime I quit after a few hours in. The game was alluring, yet frustrating at the same time.
I remember that even after a few hours, I was too low level to carry on with the main quest.

My questions is that, is the GOG version fully patched? The version available on Bethesda's website needed to be patched with a patch file if I remember correctly.

Also, any tips from veterans would be really appreciated.

I don't know from first hand experience but does this help: https://www.gog.com/forum/elder_scrolls_series/daggerfall_patch_state ?

So the GOG version includes all the official patches, but none of the unofficial patches. I would have liked if they included important unofficial patches as they have done with some other titles (VtMB comes to mind).

What mods are must to enjoy the game? Also are there any mods that improve the role playing aspect?

https://en.uesp.net/wiki/DaggerfallFiles

Add a : between Daggerfall and Files to get the url working (forum limitation)

Also, check out http://www.dfworkshop.net

They'd need permission from the makers of those unofficial patches...