Everyone knows what happend to Gil-Var-Delle. And at the same time, no one does.
Legend has it that Molag Bal, the dreaded Daedric Prince, set foot into that Wood Elf township—consumed it, according to the myth—whatever that actually means. Ancient tales employ metaphors like armies employ soldiers.

If Bal himself visited this plane with malintent, why do any of us remain? The stories about him would leave one to believe that he would not have stopped with the razing of a single Wood Elf township—he wouldn't have stopped until all of Tamriel was in flames. Just one common question of many regarding the Daedric Prince's so-called visit.

Some retort that perhaps someone stopped him—possibly an opposing Daedric Prince, a Divine, or an agent of the Aedra. But again, where is the evidence for this? No mage or historian—that I've spoken to, at least—has been able to reference a specific text for this information.

Many a historical fiction piece has attempted to dramatize what occurred there, but none of those stories can be confirmed, except to say that a catastrophic event struck the town. Perhaps the denizens were killed, perhaps they fled. None were ever heard from again, but for all anyone knows, a large fire could have been the cultprit. I can't imagine anything more catastrophic than that to a Wood Elf dwelling.
Today, Gil-Var-Delle is a maligned place, and there are not many who dare to venture near. But not because of any supernatural foe—in a classic case of rumor fostering reality, the Worm Cult, an allegiance of necromancers with ties to Molag Bal, has taken up residence there.