Not ALL the dunmer have left is sothielism (sp)!! just any survivors in Vvardenfell went there. They still have many parts of Morrowind's mainland. It's not like a country in the board game "Risk", where once you invade the land you own ALL of it. it's more like trying to conquer/maintain continents on the board game "Risk" but with even more divisions of the continent.
and yeah, for the games sake, i'm sure the dunmer will not go extinct or anything.
No, the argonians really did clear off Morrowind. Got as far north as the ruins of Vivec city. At this point, the only dunmer around are only found in Solstheim, Skyrim, and Cyrodiil. Morrowind is pretty much under the grasp of the argonians and the Hist.
Judging by how there's a dunmer village in Skryim, either the dunmer like the colder climates, or they have yet to go back to Morrowind. My bet is on the latter.
Also to note, mer breed slowly, along with becoming of fertile age at an older age than humans. They're not going to recover to full strength in 200 years. To put it perspective, humans pretty much breed like bunnies compared to mer, with the probable exception of the orsimer.