That didn't sound like the only eyebrow-raising issue. Sounds like the dwarves are going to opportunistic rather than noble. And someone suggested leaping to the Third Age? Anyway, I wasn't there, so I will try to reserve judgement and not jump to any conclusions.
Plants and animals that need light to survive sleep, those that do not remain active. Elves need less food than humans and populations are not huge. Major population centers are around where Melian and Ents are able to mitigate the Sleep.
Plants in stasis remain as they were, not dead. Animals in stasis exist in hibernation, but awaken if disturbed. Dwarves are able to survive on plants they grow underground. Not a lot of trouble and works just fine.
No ecosystem can last for long without the sun. Nuclear winter is a thing...and there's a reason a large meteor impact can cause a mass extinction. [And even ecosystems that exist without sunlight rely upon the decaying carcasses of creatures who do live in the sun.]
So, the situation is already implausible and ridiculous. The Sleep is a way of saying - 'magic makes it work, carry on'.