they made those "blasted things".
to put it simple:
there was Snow Elves who got their arses seriously kicked, and applied for refugee status in dwemerlandia. Dwemer, who themselves was not some tree-hugging hippies, grant them refuge, but to secure their position, for generations feed Snow Elves with narcotic fungi that made them blind, ugly and stupid, and in the end positioned then gene-deformed Snow Elves as their slaves.



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