The dwemer are not your standard diggy-diggy fantasy trope dwarves. They use highly advanced magi-tech to build automations, steam machines, and advanced magical constructs. They aren't dwarves, they're dwemer.
...I'm not sure what this has to do with anything anybody said in this thread.
Also, I'm 100% sure the ES team didn't first name them "Dwarves" thinking "We'll call them Dwarves, but in reality they're normal elves (cus we just don't have enough elves in Nirn!) but got a nickname from a frost-giant cus' they were small to him".
Obviously they're that way now... but I'm betting on the initial design stages bye the lore-writers that they weren't originally elves.
