Board Thread:Lore Discussion/@comment-4092092-20130801070333/@comment-71.187.217.66-20130807041109

It's very possible that the first snow elves to live underground did continue breeding. They could have evolved overtime to the point where their eyes just stopped developing and began to diminish out of lack of necessity. Maybe the scarring is due to recent evolution of the face and the Falmer's facial construction not yet having developed to the point where the former placement of the eyes isn't obvious.

It only took ten generations for Bretons to come into existence. The First Era alone was over 2900 years.

I don't think the possibility of continued breeding underground can be definitively ruled out.