If you can see past the technical shortcomings and trial-by-error learning curve, you will find a RPG with no equal.
To understand why Gothic is considered a cult-classic you must understand the story, and experience the vibrant, living world it offers because no RPG before it, and only a select few after it managed to execute said parameters so well.
As a criminal sentenced to lifetime servitude in a confined penal colony known as The Valley of Mines, you are thrust into an unforgiving, surreal world with only a letter addressed to the High Magicians of Fire residing within. The Valley of Mines is cut-off from the outside world thanks to a magical barrier surrounding the valley. You can enter it, but you can't get out once you're inside - this creates some clever gameplay twists; goods from the 'outside world' such as bread, cheese, wine and even women are considered invaluable while gold coins have absolutely no value at all - instead, chips of magical ore (which coincidently can only be mined at the valley) are regarded as hard currency.
Since the positions of power within the isolated penal colony have shifted from the overseers to the criminals they were supposed to be watching over, the valley has become the shining example of the natural selection rule where the strong survive and the weak either perish or are taken advantage of. It all fits nicely into the gameplay - you'll see numerous examples of low-lives attempting to mug you, make you do their chores for them or outright lie to you to and so on. Influence and the support of influential people is invaluable in the world of Gothic, so in order to move up in the food chain you'll be spending a good portion of the game running errands for such people - thankfully these errands are fairly creative and fun, often having more than one way to solve them.
The power of choice in Gothic is prominent throughout most of the game, there are 3 possible factions for you to align with: The Old Camp, where self-appointed Ore Barons call the shots in a hierarchic power-structure with the lowest being The Shadows, and organization composed of thieves, spies and various operatives, The Guards - the guys charged with the defense and peacekeeping in the camp, and the Fire Mages who are an authority in itself thanks to their destructive powers.
Parallel to the Old Camp stand the Sect Brotherhood, and the New Camp with Novices, Templars and Gurus for the Sect and Rogues, Mercenaries and Water Mages for the New Camp. So the first order of business for the player is to align themselves with one of these factions starting as a Shadow, Rogue or Novice and then moving up to either the 'Combat' specialists or the Magician castes.
Each such faction feels distinct enough to warrant multiple replays thanks to the different quests each such faction is eligible of - all are equally fun. Even as the story progresses and narrows to a more linear path the game doesn't lose its fun factor thanks to the engaging storyline that gradually changes the world you'll come to know in ways you least expect them.
As has been mentioned, the world of Gothic feels like a living world. All of the NPC's have their daily routines - they work during the day, relax in the evening and sleep at night. From a gameplay perspective it means you have much better chances of not getting caught stealing during the night, All the while it is safer to hunt for wild beasts during the day. The world itself is huge, all hand-crafted landscapes with many exotic locales such as old ruins, swamps, mountain peaks, Orc burial grounds, ancient temples dedicated to long-lost deities, enormous underground mine complexes and so on. It is also static, meaning that generally you'll find easy pickings the closer you are to the camps and progressively harder prey as you stray farther from them. At the start of each chapter the world gets re-populated with new monsters, making backtracking seamlessly fun again.
The combat in Gothic is often critisized for its cumbersome controls. It isn't easy to combat 3 opponents at once, most of which will try to flank you and use their numeric advantage against you - but in all fairness, it shouldn't be easy unless you have far superior equipment and abilities in which case the odds even out. Moving around and interacting with the game world is easy and handles just right. This usually doesn't apply to high level magicians who can decimate groups of enemies within seconds, by the way. An archery-focused character would also have an easier time just nailing down enemies from an unreachable vantage point.
Bugs and technical difficulties are no doubt the number one drag in this game. Skipping conversations will often cause the game to crash, and it's not unheard of to get stuck in the scenery while jumping around.
The graphics are long sub-par by today's standards - but to old-time gamers they should be more than palatable. by 2001's standards they were beautiful. All dialogue is spoken, and is delivered in a good to satisfying way with capable voice actors that do the job, but don't quite manage to execute it in a spectacular way like, say, in Freelancer.
All-in-all, Gothic is a unique RPG with a great plot that is enhanced by its world and memorable characters. If you like RPG's, you should definitely give Gothic a try.