Board Thread:Online Discussion/@comment-5843829-20130505154305/@comment-8267436-20130506184618

The disappearance of the Dwemer occured during the Battle of Red Mountain (First Era, 416) when they attemted to manipulate the Aedric artifact known as the Heart of Lorkhan in an effort to become immortal. As "The Elder Scrolls: Online" takes place during the end of the Second Era, the Deep Elves are already long gone. Yagrum might make an appearance, but as I believe I read that Vvardenfell will not be avalable at launch, I think it will be a while before we meet the last Dwemer, if we do at all.

Dwemer Wikia Page: http://elderscrolls.wikia.com/wiki/Dwemer#History