Reading the UESP-wiki : Please note that the article does not grammatically clarify whether :
Red mountain erupts -> Argonians invade Vvardenfel -> Remaining Dunmer of Vvardenfel flee to Solstheim.
Or
Red mountain erupts -> Argonians invade Morrowind -> All Dunmer flee to Solstheim.
At the same time - in the 'politics' section, Houses Dres and Hlaalu are described as being "on the rise" and Barenziah and Helseth as still on the Throne of Morrowind.
If everyone had gone off to live on Solstheim I highly doubt anyone would be "on the rise".
So I think the first interpretation of the text might be what is meant.
Not that I know.
The book makes it seem like it's most of Morrowind:
"We call them the Dunmer, and they used to live in Morrowind, which is what's below us now. Now most of them are gone."
"A volcano erupted and destroyed most of their cities. Then my people came in and killed or drove out more."
"The few that remain are scattered. Most are on Soulstheim, an island far north of here."
Hlaalu on the rise comes from the 3rd pocket guide, which is from before all the mess.