I know it had something to do with the Dwemer.

snow elves were always the falmer, or do you mean how the became what they are today? blind and pale? well, you'll have to blame the Nords on that one

due to being slave for so long their mind degrade to those we see now, they become like animal.

slaves to the nords or dwarves

Dwarves.

and forced under ground by the Nords

The Snow-elves or Falmer used to live in Skyrim above ground, then they and the Nords went to war. The Nords being kick ass axe in the face type of people slaughtered the Falmer forcing them to retreat and run. They went to the Dwemer and asked for safe keeping. The Dwemer let them in, but they did not trust or like the Falmer much more then the Nords.

The Dwemer however did see a option for a brighter easier future (mostly for themselves) and started enslaving the Falmer, locking them in their dungeons and started a long process of constant torture and malnutrition on them, essentially changing the entire race to the deformed Falmer we see in Skyrim today.

There's an alternate story, as told by Knight-Paladin Gelebor, one of the last remaining uncorrupted Falmer.

He claims the Dwarves sent out a missive offering protection, and openly saying the Falmer had to allow themselves to be blinded to be protected. It was never a deception but a choice, and most Falmer took the offer. Some resisted and hid themselves away in their own places. A few remained uncorrupted, but were eventually killed when the corrupted ones called the Betrayed found them. Now only one remains, because his brother was a vampire and needed to be destroyed.


However Gelebor said the mushrooms only took their sight away. He can't explain the twisted Goblin like forms they now take on, or the hatred in their hearts.

Falmer are blind, because they have lived under ground for so long.. In exchange they gained exceptional hearing..

Source: "Todd Howard, Behind the Wall: The Making of Skyrim"