Or you can have multiple ways to achieve what you want. If the combat is too difficult, try something like poisenout apples, persuasion minigame or even actual dialogue (I still have some hope for F3 ).
Well that's ideal, but that doesn't help with aspects that aren't to do with game difficulty, such as the player's unwillingness/inability to pay attention to direction. Something that big shiny red arrows that point the way are an alternative.
Even though I don't really agree with the whole notion of dumbing down, an option to is a reasonable compromise to broaden your market.
Or play at a lower difficulty level.
Well, that's part of it. Trying to catch repeated player failure and adjusting the game difficulty accordingly. But there's a lot that needs to be tracked to put player failure into context. For instance, the player might be taking on something far beyond their abilities, and in such a case, the game shouldn't be prompting the player to adjust their difficulty level, or just outright doing it without the player knowing, it should educating the player that not all battles can be won by all characters, so perhaps they should come back when they're more powerful.
IMO all this is better than things like in-game walkthrough/cheats. Maybe it's just me, but I'm glad there is the need to quit (or alt-tab) a game and search for a hint on the net instead of simply pressing some hotkey to show you the solution to every problem. You can edit your saved game, google a walkthrough or cheats, but these shouldn't be parts of the game. You do it consciously when you are really stuck or to overcome a bug.
I'm fine with it, as long as it's inobtrusive. For instance, many sims, space/flight sims in particular have invulnerability/unlimited ammo/etc options that can be toggled from a menu. It only damages the player's enjoyment of the game if they choose the option. Unfortunately, Oblivion's method of patronising the player every step of the way with a step-by-step playguide means the player has to take the "dumb" option.
I'd be all for the "three hint" style walkthrough, where the player can get a vague hint, a more direct one or finally the exact solution, if they request it, either directly or by optionally enabling the game to track player failures.