the falmer are snow elves . that's what they have evolved into because they were slaves to the evil dwarves .
but I didn't understand the falmer having human slaves for . ( how does one communicate with a non speaking falmer ? )
Think of it this way:
The snow elves were poisoned and enslaved by the dwemer.
The Dwemer then enslaved the snow elves.
The snow elves, in this condition of bondage, evolved over thousands of years to become what we see in this game and call Falmer.
With this history of bondage now part of their 'cultural heritage', these falmer see it as natural and normal that the strong enslave the weak. Hence, their interest in occasionally taking and keeping slaves.