The lone Dwemer already answered that question, he was off world at the time, possibly in oblivion or in another plane. It's possible others were as well.

As for what really happened to them, no one really knows still. They disappeared. Maybe some of them became Ash, maybe not. Until it appears in-game or in a canon novel, it's not officially lore.

Here we go, from the dev's mouth


In short, the dwemer become the Numidium. All of them, save for one lone dwemer. If there's a question to be asked, it is why only 1 dwemer did not become the Numidium.

As for what really happened to them, no one really knows still. They disappeared. Maybe some of them became Ash, maybe not. Until it appears in-game or in a canon novel, it's not officially lore.

Who says that transforming the whole race into a giant robot was a mistake? Some of my best friends would very much like to see real-life humanity follow a similar path, and they're not insane. It's called transhumanism, and its a rather reasonable idea.

Here we go, from the dev's mouth


In short, the dwemer become the Numidium. All of them, save for one lone dwemer. If there's a question to be asked, it is why only 1 dwemer did not become the Numidium.

The Dwemer appear [...] "just like us". They come across as a bit eccentric, perhaps, but certainly there is nothing fearsome or dangerous about them. Compare these to the Dwemer of early Redguard legend: a mysterious, powerful race, capable of bending the very laws of nature to their will; vanished but perhaps not gone. Or the Dwemer portrayed in the most ancient Nord sagas: fearsome warriors, tainted by blasphemous religious practices, who used their profane mechanisms to drive the Nords from Morrowind. [...] Marobar Sul's Dwemer are so much more comfortable, so much friendlier, so much more familiar, than the real Dwemer, whose truly mysterious nature we are only beginning to understand. The public prefers the light, trivial version of this vanished race. And from what I have learned in my years of studying the Dwemer, I have some sympathy for that preference. As the following essays will show, the Dwemer were, to our modern eyes, a remarkably unlikeable people in many ways.

Until it appears in-game or in a canon novel, it's not officially lore.

In short, the dwemer become the Numidium. All of them, save for one lone dwemer. If there's a question to be asked, it is why only 1 dwemer did not become the Numidium.

I have a feeling that this is exactly the reason why it failed. They tried to uncreate back to the original spirit, and that one piece was missing.

Or YB forgot to flip the switch from "Off" to "On."

Most likely the last dwarf was hiding a lot from us. Fyr possible knew, but maybe he was being lied to too. But then again, you don't go 4000 years without being able to outsmart a dwemer.

Yagrum Bagarn, last of the Dwemer: http://images.wikia.com/elderscrolls/images/8/8b/Yagrum_Bagarn.jpg

I think he's the most interesting character in Morrowind by far.

I see your Yagrum and raise you a Divayth Fyr.

As for what really happened to them, no one really knows still. They disappeared. Maybe some of them became Ash, maybe not. Until it appears in-game or in a canon novel, it's not officially lore.

It is in-game, you're just not looking at it right.

I wrote an article about it a long, long time ago. The article does use an out-of-game text, but I could do the same thing without that text, it'd just be taking the exceptionally long way around.

And here's http://imperial-library.info/content/final-report-trebonius, for those interested. I have a hard time imagining it being even longer

Walk-Brass is a Reaper?

...

I'll get my coat.