No, they are not small. It was giants that gave them the dwarves nickname. Hmm, I wonder if it was the giants in Skyrim?
they could always be hiding out somewhere (falmer were thought to have died out but they are in skyrim, apperently)
I think there was some infor i Morrowind that showed that it was impossible. That the Dwemer did not exist in the real world or the known Oblivion worlds. The onhly reason the guy in Morrowind survived was because he was not in this reality at the time.
Anyway, Morrowind shows that they probobly all turned to ashes, all at the same time. But who knows. I do hope we get more info on what happened.
When I first saw the Skyrim Teaser I thought they where talking about the Dwemer (untill I saw the dragon). Who knows, maybe they will return one day as a storyline in some way?Maybe Bethesda have been planing something all along?