Approximately 200 years after the Oblivion Crisis, Falmer were found deep within Skyrim's Dwemer ruins by The Dovahkiin—now blind, pale creatures that more resembled goblins than elves. According to the book "The Falmer: A Study", The Dovahkiin was not the first to encounter these creatures—in fact, the book's author proposed a potential history for the Falmer explaining their current state. This history would state that the Falmer were driven into the underground preceding the death of the Snow Prince, where they sought sanctuary with the Dwemer in Blackreach—who betrayed them, making the Falmer into slaves and causing their physiological changes such as their blindness through a forced diet of toxic fungi. A war between the Dwemer and Falmer soon occurred, known as the War of The Crag, which ended with the Dwemer's disappearance. This allowed the Falmer to populate further through Blackreach and the lower levels of Dwemer ruins.
I thought it was intersting that the falmer could be a reason for the disapearence of the dwemer.