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The Disappearance of the Dwarves was a major event that took place in 1E 700. The event came about as a result of the events at the Battle of Red Mountain, which brought about the near-complete disappearance of the entire Dwemer race, save one - Yagrum Bagarn. 
Both translators conclude that Kagrenac, the great Dwemer engineer, used profane tools (Wraithguard, Keening, and Sunder) and specific rituals to attach the Dwemer race to the power of the Heart of Lorkhan; which, for one reason or another, caused the destruction of the entire race. That the Dwemer disappeared during the Battle of Red Mountain is something of a coincidence; perhaps spurred on by the armies of the Chimer, led by Indoril Nerevar and his generals Voryn Dagoth, Vivec, Almalexia, and Sotha Sil. According to certain historical sources, those four Chimer were far more involved in the event, having fought the Dwemer King Dumac and Kagrenac themselves in the deep caverns beneath Red Mountain, possibly forcing their hands. It may also explain how Dwemer artifacts do not appear to age, and how much of their machinery (and their Centurions) are still operable today (and in one documented case, how they react at various distances from Morrowind).
There is also mention of how the Dwemer thought it unfashionable for their deities to be less important, less powerful, and less influential, than the other gods of the realm; and thus allowing for a general desire to experiment on the Heart, once discovered.
The books themselves have very different purposes in this reasoning. Divine Metaphysics explains how to create a god through sorcery; The Egg of Time argues that it is not dangerous to interrupt a link to a divine source of power (which appears to be quite to the contrary, given how the Dwemer vanished so suddenly and almost completely, with Yagrum Bagarn being the last living Dwemer). Hanging Gardens is little more than a tourist guide of a sorts; barely useful beyond its value as help in translating Dwemeris and other Dwemer books.