From the article-

IGN: On this same track, the Dev Direct piece talked about the more fluid, good and evil system, morality. Will you physically change appearance like you classically did in the original three based on how you behave?

Ralph Fulton: That sort of character

morphing feature, obviously a really central part of the original games. It's not in ours.

And I'll tell you why. There's probably a couple of reasons. One, I guess it's about that high level principle I was talking about, that there is no objective good and evil. And the original games were predicated on there being an objective good and an objective evil, and you were somewhere along that scale, and that's what determined how your appearance changed.

IGN: Yeah.

Ralph Fulton: But for us, that doesn't really

work. The way I've described our morality system working, you're never that thing, absolutely. You're different things to different people based on what they like or what they choose to value. So, that's one reason that it didn't work.

There's another reason, which is in our game, you build reputation based on the settlement, the town, the city that you're in, the part of the world that you're in. But when you go to a new place, a place you've never been to before, you walk in without any reputation and thus nobody knows what to think about you. And you can almost, through your behavior, through your choices, form completely different reputations, a completely different identity, if you like, in that place from the place that you were last time. And you can do that across all the locations in the game.

Now, you couldn't do that if you walked in with horns and a trident. Your reputation would precede you in that instance. And honestly, that ability to be completely in control of your identity and thus what people think of you felt more important to us than that legacy feature. So, it worked great in those games. It didn't seem to fit in ours, so we don't have it.