I am rather as newb in ES lore, but I have read here a lot and the theories of what may have happened to the dwarves in MW. Well, in MW there is one Dwarf who
was apparently outside the effective range of whatever happened to the Dwarves and thus survived, but I am confused by the ghost of that one Dwarf below the
Mourhold city in the expansion. He seems to be aware and sentient, just in ghost form.

He is still, somehow like all ghosts, bound to Mundus. Though I must say he must have quite the willpower, because the Dreamsleave can be extremely maddening to spirits who are not fully departed there, as their identity is washed away in a clean slate, or they were there but were forced back to Mundus and are really angry. To me, I see him as someone to continue the plot, or his dwemer mind allows him to ignore the rules of Mundus.

Hopefully someone else will arrive to give a better explanation.

sorry, I meant dwemer.

Same thing, different name