I'll give you a brief run down.
They are elves, Orsimer to be exact. Mer meaning elf. They were cursed, like the Dunmer (Dark Elves), but more warlike. So, yes, they are just as Mer as the Dunmer, Altmer (High Elves), and Bosmer (Wood Elves).
Well, when going for a mer accurate definition, mer = folk, and orsi = pariah. The orcs, or orsimer, are "Pariah Folk." It's the dunmer who are "Cursed Folk," as Azura cursed them. The reason why humans are not called "folk" is that the aldmer, and now by extension the altmer, never considered them to be actual people.
http://www.uesp.net/wiki/Lore:Orsimer
It doesn't seem to state they're actually elves in this article. It says the Dunmer, Bosmer and Altmer are all elven people, it just refers to the Orcs as beastlike people.
Bad! bad bad bad bad! Never link UESP or any wiki when it comes to lore. Stick with actual primary texts, as these wikis are notoriously horrific when it comes to lore. The orsimer are, indeed, mer. Please refer to "http://www.imperial-library.info/content/true-nature-orcs," and that orsimer blood is required for a quest, along with the blood of bosmer, altmer, dunmer, and falmer.