You are mixing up the chemistry terms for redox reactions (oxidation = atom loosing electrons, reduction = atom gains electron), with a possible oxidation product (silver oxide).
When silver is oxidized in fading, silver atoms loose an atom and become mobile ions :
Ag ---> Ag+ + 1 e- (electron)
In most cases, the ion moves away from the original silver particle, and redeposits either as smaller silver particles after being reduced back to Ag, or reacts with sulphur in the air to produce stable silversulphide (Ag2S).
In both cases, the original oxidation of the silver image, leads to a loss of density of the original image, and discolouration, as the smaller silver particles of the secondary products (whether Ag or Ag2S), reflect light differently and hence have a different color.
A recommended article about all this is Gawain Waever's
"A guide to fiber-base gelatin silver print condition and deterioration"
Marco