Board Thread:Lore Discussion/@comment-3225355-20150107041151/@comment-25531876-20150109122405

180.181.142.191 wrote: Well heres a whopper. How did the Dwemer disappear? Personally I think it will always remain a mystery but who knows, maybe one day Bethesda will reveal everything... This was all explained in Morrowind.

It probably has it somewhere on the wiki, but I'll sum it up for you:

Kragnarec used his tools to mess with the Heart of Lorkhan,and someone (was it Azura?) made them disappear. If you want more details, it is probably in the Dwemer article and the Heart of Lorkhan article.