It does work like classic Daggerfall. But classic Daggerfall was limited to a 320x200 4:3 display and DOS only. It had a very fixed set of parameters for it's operation.
Daggerfall Unity on the other hand has to work on a huge variety of hardware and software platforms, and display surfaces from 320x200 all the way up to 4k and beyond. There's a lot more going on than classic ever had to deal with. That's why the settings need to exist so people can tune this based on their environment.