His name translates to Dark Overlord Fire which sounds quite intimidating to me. The question is whom he is the overlord of, as the falmer doesn't appear to care about him, perhaps he used to control the dwarves in Blackreach?

About how he got there, try to imagine how silly it would look if a dragon took the elevator. My guess is that he with purpose flew into caves leading into Blackreach to alone dominate over the advanced dwarves, rather than a shared leadership with other dragons over the ancient nords. There's also the possibility he's a somewhat more aggressive version of Paarthurnax, as Vulthuryol is very solitary too and likely desiring to keep his desires for dominance in check.

i think he got bored and tried to take over the more advanced dwemer  instead of the nords who only had a basic understanding of magic. but he failed and instead of killing him they harnessed his magic to that glowing orb thing. the reason it didn't go out is because perhaps he used to be much more powerful until the dwarves took him down a notch.

Yes, that ball acted as a their sun underground, illuminating all of Blackreach the same as it would be mid day outside. But as the dragon got weaker, so too did the light