They are, if anything, a tad bit shorter than Wood Elves.
On topic, they were at war with both the Falmer [inside their cities] and the Dunmer[outside their cities] at the time of their disappearance, it makes sense they would fill their cities with traps. To prevent the Falmer from below and the Dunmer from above from coming in.
It would be especially effective on Falmer because well...they are blind. They wouldn't know what hit them.
Well at least at some point they were normal.

They disappeared because some of their most brilliant minds (engineers) created the brass god and tried to anti-create the dwemer race back to the divines (basically making them all gods, or something along those lines). The attempt of activating it made all (but one) dwemers disappear from the world, leaving their armors empty where they had once stood.