The falmer would be great at guerrilla warfare, but ultimately they suffer from one big disadvantage (other than the Sun): they cannot, at any time pose as a friend. As soon as one is sighted, an alarm would be sounded (whether that "alarm" was a high-pitched scream or an official alarm). Once the garrison is alerted, things just got much harder for the falmer.
Also, we have next to no idea about their culture. As far as we know, they could suffer from even worse inter-tribal warfare than humans. I don't imagine that living underground is particularly easy and resources are likely pretty scarce. That adds up to conflict.
I think they make excellent bogey-men and they kept me from going into several places until I was in my late 30's level-wise.
Charus does the job. And about gameplay, yes a falmer shadowmaster can take a giant down as well as you. But in LORE terms the Falmer would use alot of strategie and atack only on the night.
And about the poison. Yeah we could use their poisions agaisn't them. But to do that we need to kill some Charus. So some soldiers were going to get killed in the process. Also the Falmer wouldn't care if someone stole their posions to use agaisn't them. it would make the same effects in booth sides.
I can see that the Falmer could plentily smash cities. If Yasgramor and his 500 soldiers killed thousands of snow elfs, why they can't? If Tiber Septim conquered Tamriel with an small army, why the Falmer can't? Anyway wee must see the results in the LORE. I know that the Falmer are a big problem. Strategie i say.