They are an enigma to the inhabitants of Tamriel, and only those who make deals with them or have visited the Soul Cairn know of their existence. Most individuals who deal with the Masters are deceived, and their souls stolen to appease their appetites.
It has been speculated that the Ideal Masters have transcended beyond physical manifestation, and now exist as non-corporeal beings. When they do interact with others, be it to feed on their victims or speak to their underlings, they do so through the crystalline structures dotted around the Soul Cairn.
The Ideal Masters' weakness is their hunger for pure souls. This hunger is believed to be the reason for the existence for the Soul Cairn itself, and it is often the only leverage necromancers have when bargaining with them. In return, the Ideal Masters grant them the ability to conjure powerful undead guardians in a similar manner that conjurers would summon an Atronach or Daedra.
At some point in history, the masters asked Durnehviir to guard the Soul Cairn until a powerful necromancer named Valerica died. Durnehviir, not knowing that she was a vampire, and therefore immortal, accepted and was doomed to guard Soul Cairn for eternity.