Support for dynamic shadows was dropped years ago when they decided they had to port the game from the Ogre3D rendering engine to OpenSceneGraph in order to eventually reach 1.0 quality: https://openmw.org/2015/announcing-switch-openscenegraph/

It's pretty impressive that the project has been so successful with such a major transition, and that things didn't stall and fall apart along the way despite how long it took.