Following the path to the bottom and taking the tunnel lined with egg sacs leads to a Chaurus hatchery. If the Dragonborn is poorly equipped, the melee and long range attacks of a Chaurus can be devastating. The room is devoid of anything of value apart from a single skeleton and the Chaurus eggs.
The next chamber consists of a pit with two more Chaurus with some skeletons which appears to have been a previous meal. On the right side is another chest next to the tunnel exit and more Chaurus eggs. With The Elder Scrolls V: Dawnguard, higher level players may encounter Chaurus Hunters and Chaurus Hunter Fledglings.
When traversing the next tunnel, expect to encounter a Falmer. The tunnel ends at a Dwemer door. Open and proceed through.
Behind the doors, is a Dwarven Centurion and a high level Falmer. One may draw the Falmer away from the Centurion by going back into the tunnel, where the Centurion is too tall to pass through. Once the area has been cleared, there are Dwemer Artifacts and Falmer equipment on the altar and a chest near the tent.
Exit the chamber on the east side of the room which leads back to the first chamber in Shimmermist Cave behind the waterfall.
It is possible to rock jump and enter the final room of the Grotto directly.
Jump onto the ledge at the intersection of the walkway and the wall of the chamber on the right hand side when facing the exit from Shimmermist Grotto. Circle the room and then jump onto the ledge that goes to Shimmermist Grotto. Be aware if the Dragonborn alarms the Dwarven Centurion and Falmer, they will follow the Dragonborn even if he/she returns to Shimmermist cave.
If one enters this way, it is possible to avoid the fight. Sneak as close as possible to the chest without being detected, then sprint to it, loot it and sprint out of the cave. However, the Falmer and Centurion will give chase.