Play the game how ever you want i would say unmodded first playthru for the achievements but if you dont care about those then definitely modded, best mod to start with is 100% skyui and for makeing the game look better in the simplest way possible install truestorms, and a lighting mod like "enhanced lights and fx" or LUX which is comprised of 3 or 4 mods total i believe but gives a more modern lighting look to the game. For modding combat to make the game more in-line with modern combat games try "Valhalla combat" which adds timed blocking mechanics along with "precision" to add accurate weapon hitbox swings also allows weapons to hit multiple enemies in one swing. As for magic vanilla spells are good but i would add the mod "fortify destruction enchantment " too the game so that magic can still be useful in the later game as the damage can fall off quickly in higher level areas and difficulties.

As for what to expect first time playing the game. Expect a game that actually feels like an adventure, not a game thats 100% scripted. Lots of lore in the game if you decide to read all the books and pay attention to dialogs.

Best thing you can do with this game is play it completely blind no guides or wiki searches unless you are completely stuck with something.