First, the place was Velothi, a bunch of squabbling Chimeri and Dwemeri tribes.
Then, the Nords came, conquered, and named it 'Dunmereth.'
The Chimer and Dwemer finally got smart, joined up, kicked the Nords out, and created 'Resdayn.'
Then the Dwemer vanished, the Volcano erupted, the Tribunal showed up, everybody's skin changed, and things got _really weird_. Now the lovely place is called 'Morrowind.'
Then, the Nords came, conquered, and named it 'Dunmereth.'
The Chimer and Dwemer finally got smart, joined up, kicked the Nords out, and created 'Resdayn.'
Then the Dwemer vanished, the Volcano erupted, the Tribunal showed up, everybody's skin changed, and things got _really weird_. Now the lovely place is called 'Morrowind.'
The term even seems to predate the metamorphosis of Chimer into Dunmer (I assume "Dunmereth" means "place of the dark folk," or perhaps more correctly, "[the] dark folks' land." Of course, this raises the question of why Nords are using merish words in the first place...). Thus, given the delightful relations between these two people, why would they willingly use a Nordic epithet as their identity (even if it is of merish origin)? Or was this more or less discarded as Morrowind became more developed (this does seem to be the only mention of it, which predates the release of Morrowind, and though it is by MK himself, it is in a fairly unofficial format and in a rather obscure location. The only thing keeping me from discarding it is that it isn't overwritten by any other origin story for the word, at least that I'm aware of, beyond the common-sense association of the word with the appearance of the people).
(if it was discarded, then hey, at least you learned a piece of useless trivia. Still, since the use of the word predates the existence of any dark-skinned mer, it seems to indicate that the "Dun" in Dunmer is indeed meant more in terms of personality than appearance. Or maybe the Nords meant "dark" as in "evil," which is fitting from a Nordic perspective, but nevertheless).