There is info in books, but there isn't really anything or anyone in-game pointing you towards it, which is kind of a shame because the Dwemer ruins might have been a little more interesting if they actively provided some more info on them. But it seems most of the info on them comes from Morrowind.
The mind is like a parachute: it only works when it's open
it's answered with a hint of uncertainty by morrowind characters, but the real life writer admitted that their version is the true one. in laymen's terms, they transcended their previous state of existence by becoming part of Numidium, as others have said. this transcedence had nothing to do with the war against the Chimer.