Have you liked any of the following:
Arcanum
Morrowind
Jagged Alliance 2
Neverwinter Nights
Baldur's Gate (not sure about 1, 2 definitely) ?
If your answer is yes, it has been proven. Level scaling has been here for ages, it's just Oblivion that has made it too obvious.

What Fenixp said with different approaches to level scaling - Scaling Overhaul Comparison for Oblivion.

The yelling is about, that some claim level scaling being lazy design, flawed and inherently bad and any game doing it, could always be enhanced by replaced it with area scaling.
Before certain fellas jump on it again - yes it was lazy designed, flawed and bad in Oblivion. No it therefor isn't necessarily so too in other games....

Now let's take a look at Skyrim's mainquest, the dragon problem. They start with lvl10 and scaling increases every 10 levels up to lvl50, then 58, 62 and 75 and become more powerful (additional skills) with each variant. They all start appearing between 2-10 lvls before you reach said lvl with your character.

With set lvls for all dragons and avoiding killing one with a lvl5 char, you'd have to delay the mainquest significantly (with player lvls ranging from 1-80, let's say at least lvl30). Challenge once you hit lvl50? Nope. Even higher lvl probably beat them up with a walking aid.
With area scaling and setting different lvl dragons in it, you define parts of the world as unsafe until hitting lvl60+, practically rendering them unusable for other quests.
Now add in the dynamic appearance of them, which includes attacking towns.... and that's just the mainquest. Add guilds / factions / civil war / everything else in. You'd get a better game?

Take a Mass Effect series or Dragon Age: Origins and set them up with area scaling. How likely is it that you end up with a lvl-walled, go through a, b, c, d, e before hitting up f narrowed experience? A so called open world that actually falls into the trap of putting you on rails?

If grinding is considered the solution to level scaling in Skyrim, I wouldn't wanted that Final Fantasy clone. The whole point of grinding is to fight battles and level up so you can survive against the bosses, and ultimately, the final boss. In that regard, such games are basically a combat simulator, with a spectacular storyline thrown in which is the reason why you're fighting. We had and still have, plenty of those games available.

And? Why does that matter in a single player game? Do we want just Dark Souls clones now?

Adjust the difficulty settings. On master or legendary a Draugr Deathlord can one-hit you with a dragon shout. One dragon breath can kill you. And I'd still want to see that youtube video of someone rofl-stomping a lvl10 mountain lion in Oblivion on 100% difficulty, without cheat items / exploiting or a significantly higher lvl char.

While being the center of the game universe where everything and everyone changes based on what I am might tickle my bone, it is these kinds of unnatural mechanisms that make a game feel... just a game. Just like the auto-changing difficulty levels.

I don't mind if NPCs level up too around me (hey, if I can, why shouldn't they be able to do it too?), but it shouldn't be artificially linked to my progress, IMHO.

But I wouldn't be surprised I've played lots of CRPGs where there has been auto-scaling, and I didn't mind it. But I just don't like it as a general idea.

I don't care how things were in P&P RPGs, never played them and never will.

Yeah, it's the centre of the universe aspect I don't like. I want there to be challenges. I don't like the idea that if I can see an enemy (up to and including dragons) I should be able to take it on right now.

I personally think it was a mistake to treat dragons as an infinite commodity just like any other enemy.

The lore says dragons are these fearsome, legendary foes and yet the main quest lets you punch one in the face within about an hour after starting the game; I don't know of any in-universe explanation for this (dragons are not weakened by the Dragonborn's very presence or anything like that). I get that they want the main quest to feel epic and dramatic and all that but they are making a 50-hour RPG, not a three-hour film; there is room to breathe and establish the primary enemies as the significant threats the plot claims they are.

If I'm roaming around in an RPG after playing for only an hour or so and I see a dragon in the distance my first instinct should be to flee for the hills in the opposite direction, not run merrily towards it knowing there is a reasonable chance that it is nerfed such that I can kill it right now regardless of my level.

Ay, this may be. I wonder how they want to attain or even outmatch the story in the next TES installment with what they brought in Skyrim. Fighting dragons, dragon shouts, the last Brotherhood quest...

One could argue that the dragons just gotten re-awakened after centuries being buried. So they haven't aquired all of their powers yet. And a dragon considering himself as a supreme being, even in weakened form is canon. But yes, that's again just in ones head and not explained ingame.

Hmm... I've caught my self many times walking through Solitude and looking up because I saw the shadow of a bird on the ground, just to check. So that still works for me.

True and considering that Skyrim still needs Steam it's kind of pointless anyway.
Die hard fans who want some decor might be interested, but I think Bethesda should rather endorse an Elder Scroll on papyrus as a gimmick.

They always come up with games where level scaling was basically irrelevant, didnt affect much, and would have made no difference if it wasnt in the game. And that somehow makes the case that level scaling is a good thing. See Fenixp Post above, those games did not need the scaling they had. Just look at his examples, Arcanum? Wtf, is he talking about how followers level up with you as level scaling? Baldurs Gate 1&2? Only some random encounters , which are like 0.3% of the game, are scaled. Neverwinter Nights? Didnt the other guy just parade this as a negative example for lack of level scaling? And Morrowind, which has been right after Oblivion and the new Fallouts in bad level scaling.
See Fenixp, thats what I am talking about, JMich would have never posted something that easy to laugh off.

No, thats not area scaling, that is design of a linear game, it has nothing to do with scaling at all.

Other unrelated example: how the cars and people disappear and appear out of thin air in GTA games, if you just look elsewhere for a second. Unnatural things like that, at least if I can notice them, tend to make me feel like Jim Carrey in "The Truman Show". At least they don't help with the immersion.

Then what is area scaling? I thought that areas having specific levels was area scaling.

I think he's talking about the different between systematic scaling, ie the GAME scales enemies automatically based on your characters level in a reactive manner, and content scaling, where developers hand-design different areas of the game to have specific levels, but if you venture into a higher or lower level area the game does not scale the enemies back up or down to your level.

Content scaling, area scaling, hand placed enemies. If you go into area X, you will face opponents of level Y all the time, no matter your level. If you use area scaling instead of hand placed, you may have a random level Y enemy instead of a specific one.
Will have to dig my Dungeon Master's Guide, since it does explain the differences between area based encounters and level based encounters.

But it is not really area scaling, is it, it is chapter scaling, because there isnt even the issue of going where you want to.

So chapters are not areas? Or is it because you can't go in other places?
You have a forest, a dungeon and a cave, each one of those is an area in Chapter 3. Do you not have the option of going to the area you want? Are those areas not scaled to a specific level, which you have already passed? Aren't all the enemies in those areas lower than you, thus providing no challenge?

And what is area scaling btw, if not the fact that enemy levels depend on the area you are at, not your own level?

Come on, stop asking me these stupid questions, you know very well that it is a linear game and there is no point in going into any area but where the story tells you to do in Neverwinter.

So you still don't answer what is area scaling.
Linear game doesn't mean no area scaling. The fact that you can go to any of the 3 areas in any order you want doesn't make it linear. You don't have to go to the forest before going to the dungeon but after going to the cavern. So it's not that linear either.

So I'll ask you again.

What is area scaling. So far you've told me "This is not area scaling." while not answering what is area scaling. Can you give me an example of Area Scaling?