I don't recall anything ever actually being revealed about their disappearance. I know in Morrowind you come accross one all bloated and infected with corprus. But he doesn't know what happened to his kin. I've never played Arena or Daggerfall. I haven't gone through much of Oblivion, and I haven't run accross any lore in Skyrim yet that answers this question. I don't think Beth will ever outright explain it because it lends mystery to all the ruins we explore. What do you think happened to the dwemer dwarves?

I've read hintings that they dabbled in something they shouldn't have. What, exactly, do you think it was?