It didn't. The magic level began to drop and then mysteriously stabilized. Explorers were sent out, and they discovered a world transformed. It was inhabited by strange creatures they had never seen before, plants and animals that had barely scraped by, and populated still with Horrors. It has been a hundred years since the doors were reluctantly opened. It is an age of legend, as brave heroes explore the jungles, reclaim the land, and combat the Horrors.
This is the world of Earthdawn, my favorite fantasy RPG. Why is the wilderness filled with wandering creatures? Why are there dungeons full of monsters and magical treasure? Where does magic come from? How does a magic sword become a magic sword? Earthdawn began by taking a cold hard look at all the classic tropes of fantasy role playing and said "If this is what makes for a fun game, can't we at least come up with a world where all of this makes sense?" The setting is designed to bring sense to these fantasy tropes, and the system is designed to reinforce the setting.
The rules are slick, combining the best strengths of level-based and skill-based systems. The world-building is spectacular. It sucks you down into the Age of Legend to battle with evil and rebuild a shattered world. Earthdawn Fourth Edition is currently being funded via Kickstarter and I encourage all lovers of fantasy to take a look.