It would require a separate sending unit, and oil level is hard to
gauge when the engine is running and/or the car is moving.  That said
some mfgrs. like Porsche actually do have a low oil level warning that
reads the oil level when the key is first turned on.

nate

Because the dipstick tells you when the LEVEL is low, and anyway an
engine won't be damaged by low oil level until the low level causes the
pressure to be low also- plenty of time to find it with the dipstick
first. The light is to tell you when there's a mechanical problem that
is preventing normal oil pressure, which is almost immediately fatal to
the engine.

Visually checking the oil with the dipstick provides an
opportunity to observe other matters that may require
attention.  Many vehicles would never have the hood opened
for inspection if you installed enough warnings.  In an
engine in decent condition, the oil comsumption is low
enough that it does not require frequent visual inspection
of the oil level beyond every couple of tanks of fuel.  In
the ancient history of the automobile, we had what was
called a pump jockey or other not-so-nice things who was
eager to get under your hood to check it for you when you
filled up with gas.  He became virtually extinct due to the
reduced need for frequent inspection and the self-serve
station so most drivers could ignore the engine pretty much
altogether.

Why do I smell th distinct aroma of troll?

But what the heck... I'll play along - I'm bored at the moment.

Because as long as the sump has enough oil in it to be picked up by the
oil pump, the pressure will stay where it needs to be under most
conditions. Sharp cornering, up/downhill, or quick
acceleration/deceleration might be enough to slosh things around and
leave the oil pump sucking air instead of oil, so most engines have the
capacity to hold more than what is strictly needed to maintain pressure.
Until the level is low enough taht the pump can't pick it up, low (but
not so low the oil pump can't pick it up) oil level is a non-issue for
any engine but a "splasher". (And the only place I know where those can
be found is on lawnmowers and similar gear. No automotive engine that I
know of uses splash oiling)

Besides - There's a special device on the engine designed specifically
for monitoring oil level. It's commonly known as a "dipstick".

Most American cars have had both for many years.

Probably becuse adding it would cost another .50 and every penny saved
is a penny earned.  

            Steve B.

BMWs have multiple sensors, one for oil pressure, others for oil fill level.

See
http://www.bimmerfest.com/forums/showthread.
php?t=80837&highlight=yellow+oil+light

They even have the oil brand to use (BMW recommends Castrol) embossed on the
oil filler cap so you can't make any mistakes (after breakin, use synthetic
oil only & replace every 3000 miles or sooner depending on your driving
habits and environmental conditions).