but are the psijic subservient to teh altmer? I thought they saved summerset because they lived really close to it and didn't want to be involved in any fighting. They are their own religious/educational group
They're not subservient, but they are reliable.
Now, for the more general question:
The Aldmeri Dominion likely doesn't have the real capacity to be victorious in an open, aggressive, standard war against the men of Tamriel. Assuming they still rely on baby-killing for their eugenics program, they're crippling their own capacity to field soldiers as a matter of principle. What they have, is a strong navy, goblins, and weird Bosmer stuff.
Because of their sea-superiority*, and the historical precedence set by the Psijics, they don't need to worry about defending the homeland. Because the Bosmer have a strong alliance with the Valenwood, they're also probably pretty safe from invasion. This should really free the Dominion up to focus on offense. Unfortunately, there are some problems with that. Boats can't fight on land, Bosmer need to stop after every battle to eat the dead, goblins are probably hard to control, and the wild hunt is wild. This leaves them with two major methods of fighting: slow implacable Bosmeri advances, and sudden disruptive strikes. The Altmer could sail up the niben and land a thousand goblins next to the Imperial City. The Bosmer could sneak deep into enemy territory and go on a wild hunt. Altmeri privateers could mess up your fishing and merchant boats. They'll never be able to just smash your army to bits in a climactic battle, but they don't have to.