...from "Finishing the Installation" go to paragraph II...
What is a load order?
A load order is the "date modified" ordering of your the plugins that are processed in the game from earliest to most recent, the order in which content is processed by the game engine. Active plugins are plugins loaded into the game. Only plugins in your Data folder can be active, but not all plugins in the Data folder have to be active. You can activate and deactivate plugins using any mod managing utility (i.e., Wrye Bash, OBMM, the Oblivion Launcher, etc.) Wrye Bash give the users the most control over managing load orders. With it, users can do anything that the other mod managing utilities allow and much, much more. However, OBMM, over many other mod managers, also supports modifying the load order through its interface. Use ONE utility to manager your load order, in order to avoid unnecessary trouble. If OBMM users use Wrye Bash to modify their load order, turn on the setting in OBMM that keeps it from modifying the load order (except for when adding plugins because that is inevitable.) The best plugin ordering utility, however, is Better Oblivion Sorting Software (BOSS). That utility that automates the ordering of a large number of plugins is discussed in the next subsection, but users should still have some understanding of why BOSS' and correct load order have the organization that they have.
Wrye Bash has increased number of states in which a plugin can exist in the data folder, from two, active and not active (deactivated) to four, active, merged, imported and deactivated. Only active plugins are loaded by the game engine. There are two types of "merged" that Oblivion users may encounter. One usage is for a plugin that is a merger of multiple plugins. It literally contains copies of the records found in the separate plugins. "Merged" with respect to Wrye Bash, means that a plugin is virtually-active. On one hand, in both cases, the plugins' content are merged into another plugin (in the Wrye Bash case, the merged plugin being the bashed patch); however, in the case of a real merge, the individual plugins can (and should) be removed afterward. Their content has literally been assimilated in to the merger plugin. In the case of the bashed patch, the merged mods have become something akin to invisible master. The game does not see them as active, but the bashed patch depends on their contents, so they must remain in the data folder. Imported plugins are likewise pseudo-active, their contents copied into the bashed patch. The biggest difference between bashed patches and normal merged mods are that bashed patches have complex rules by which they incorporate mods content. That is wherein lies the difference between the two different pseudo-active states (imported and merged.) The incorporation of content into the bashed patch is still load order sensitive, so that is yet another reason why merged and imported plugins are pseudo-active. Because their content is loaded into the bashed patch, there is rarely a reason to leave them active. It would practically be as though their content would be loaded twice, which can cause enough issues by itself. Lastly, the content of deactivated plugins is not brought into the game at all; however, they still count toward the soft cap of 300 to 400 total plugins and BSAs. Unless you are using multiple profiles for which you use different sets of plugin and have a bashed patch for each set, remove deactivated plugins from your load order. They only waste space. The more plugins in the data folder, especially active plugins, the more unstable Oblivion becomes.
Now for the actual load order rules...Oblivion.esm should ALWAYS be first in that list. It is the master file of almost all Oblivion plugins. That means that most plugins depend on it in some way or another, and, therefor, must load after it. ESMs, "hard-coded" master files, load first, regardless of whether or not ESPs "fall between" their spots, time-wise. However, that does not mean that you can leave the ESM floating after the ESP and expect everything to work out. One of the details that many people miss is the fact that active plugins in the load order are each assigned a hex number up to FF (255.) If the ESM is 03, and the ESP is 02, but the ESM is loaded at the position of 02, problems will occur. Similarly, if you esmify an ESP (make it appear as a master file even though it has the .esp extension) and forget to espify the plugin before loading the game, it will be loaded with the ESMs. (The load order is a list. There is only one spot after the ESMs where it could possible be okay for that to happen; otherwise, the ESP is forced to load too early.)
The other general load order rule is plugin dependency. Plugins must load after their masters (which is the most obvious reason why plugins have to load after Oblivion.esm.) Plugins can have multiple masters, and they can be ESMs or ESPs. ESMs, for the aforementioned reasons, can only depend on other ESMs. These are explicit dependencies, but there are also implicit dependencies. For examples, some of the UL mods only depend on a plugin from the UL mod or the other mod it patches, instead of having an explicit dependency on both mods. Worldspace and cell editing mods are not the only mods with implicit dependencies, but they are the most likely to have patches with that kind of dependency.
In conclusion, load ordering is about which mod breaks which other mods, and what groupings help avoid the breaks with the fewest exceptions. Unless a mod is fairly dirty or an unusual compilation, it should fit into one of the general categories. If you really want to learn more about the specific categories, exceptions and how they are arranged, browse the BOSS masterlist (online). See the mod managing utilties' (i.e., OBMM's and Wrye Bash's) ReadMes or their individual guides on this site to learn how to manually rearrange your load order.
Fortunately, there is now a wonderful load ordering tool that can organize most of your load order for you, Better Oblivion Sorting software (BOSS). It does not recognize all plugins, so you may still have to do some tweaking. Of course, you will have to do that for custom-made plugins as well. Alternatively, if you add the unknown plugins to your copy of the masterlist in the position you want, BOSS can then organize them for you. That way, you will not have to move them again after rerunning BOSS. An even more efficient alternative is to use the BOSS Masterlist Manager (BOMM). BOMM not only automatically updates the masterlist by pulling the newest version from the web, but also its main purpose is to allow the user to define overrides in a DOC file that it will automatically apply to the masterlist. Once you have these utilities, you will not have to bother about many of the more boring details of load ordering ever again.
LO Template - based off the BOSS masterlist...
Better Oblivion Sorting Software (BOSS) automatically orders more than 10000 plugins, and it will save the user a ton of work when it comes time to perfect an load order. Its companions BOMM facilitates the addition of your own definitions to your local BOSS masterlist. It will update the masterlist by downloading the latest updates from the web and reapply your overrides to the latest version as well. No longer will you have to grieve over needing to re-tweak your masterlist after an update. BOMM takes care of all of that for you.