So, i have a theory that when the Kagrenac struck the heart of lorkhin with Keening, Sunder and Wraithguard the dewarves became etherial and Ghost/spirit like or invisible, and they are still in the realm of mundus but are just unable to interact with anything or be seen. Now i'm sure there will be some debate about Arniel as well, i have a theory about him too. Due to the fact that the heart was an aedric artifact and belonged to a god, is why it had such a massive impact on the entire dwemer race. When arniel struck the warped soul gem with keening, he just became a ghost/shade of his former self, a similar thing to what happened to the dwemer but on a much smaller scale due to the artifact beng no where near the power of a gods heart. This is the reason he can be summoned. This could also be the reason why it was only him that disappeared and not his whole race.

Let me know if you agree or disagree and make sure to let me know if there is any evidence that makes my theory seem idiotic, thanks.