As mentioned in my previous post, wizards are a repressed minority in elvish society. But as John asked in the comments, why didn't they just rise up and overthrow their magically-powerless subjugators and declare the elf kingdoms and magocracy?
Well, a few generations ago (which, considering the elvish lifespan, means quite a long time by most standards) that's exactly what the wizards tried. At the time, there were even more elvish wizards than there are now... but they still failed. Elves are actually rather bad at wizardry, taking decades to master arcane arts that the rarer human wizard can master in a few years.
While the elf wizards could do a whole slew of things that the warriors they battled could not, they in turn could not do a few things that the warriors could. Like wear armour. Or fight with a sword when they ran out of power. Or jog up some steps without getting winded. Ultimately, the wizards lost.
The survivors of the attempted rebellion were rounded up, and banished to the mainland of Yonda. While Yendys is a tropical paradise, Yonda is a sun-blasted, high-background-magic wasteland, infested with spiders and snakes and all manner of other poisonous monsters. Many of the exiles died, and those that didn't were warped and twisted. Their pasty complexions, the result of years spent studying indoors were burnt, their hair bleached, their eyes constantly irradiated by the arid climate and harsh sunlight. The magic of the land coupled with the peculiar biology of the elvish people meant that their descendants have obsidian-black skin, white hair, and sinister red eyes to this day. The survivors, after the first few years, got so sick of their prison continent that they took the desperate measure of burrowing and escape tunnel. Under the ocean. While this utterly insane idea was probably the result of extended sunstroke, it actually worked. The crust of the Coin is shot through with vast carven networks stretching from the Hublands all the way out to the Rim, and the "Dark" elf rebels took to these caverns, and mostly haven't returned to the surface since, so strong is their loathing of sunlight. They now have vast underground kingdoms, ruled by the best wizards among them, and have a long-standing hatred of their surface kin.
So, in short... the dark elves of the Coin are Australian Convict Wizards.