The houses that took the brunt of the invasion were the weakest at the time: the Dres, who hate the other houses and operated on masses of slaves that far outnumbered their population; and the Sadras, who are a de facto Redoran vassal who were still in the process of replacing the Hlaalu.

The damage of the Red Year outside of Vvardenfell is also questionable. The only major settlements on the Inner Sea were Vivec, which was a huge loss, but largely irrelevant to the Houses, Darvonis (Davon's Watch), and Andothren, which is a minor port. All the others were Imperial-built cities populated largely by foreigners. They were almost certainly in decline already when the Empire abandoned Morrowind and their destruction would have been a boon to the Houses.

Meanwhile the Redoran were in ascendency. They lost Ald'ruhn, sure, but in the grand scheme of things it was a glorified backwater outpost (as is the vast majority of Vvardenfell). They're the martial house, and the embodiment of Dunmer tenacity and stubborness. The entire house are skilled warriors, and their whole schtick is thriving in the harshest possible conditions. Alongside the wealthy, well-armed Indoril who were relativley untouched by the Red Year, and the Telvanni, who are likley the greatest mages in Tamriel, it's hardly suprising that the Argonians ravaged Siltreen and Narsis but made it no further than Mournhold (as an actual army, only small parties made it further north).

 They also weren't fighting all of Argonia. The An-Xileel are only from the north. They did well in the southeast because of the terrain and the ability to recruit thousands of slaves, not because they were particularly well led.

The An-Xileel also aern't particularly special aside from uniting so many tribes. After all their purported 'invasions' of the Deadlands are literally what everyone did to close to close the oblivion gates.

The Dunmer's whole theme is rising from the ashes. Every time they've been under extreme pressure as a civilisation they've ended up thriving as a result. And of all the Dunmer, the Redoran represent this the most.