Varian Wrynn was abducted by the Defias while travelling in secret to Theramore and was held captive for a time on Alcaz Island near Theramore Isle. The in-game quest chain The Missing Diplomat follows the story of his abduction, though it ends abruptly, leaving many players speculating it has yet to be completed by the developers.
Until patch 1.9.0, players could find the king in the sewer dungeons of Alcaz Island, though he served no in-game purpose. After that patch, the king was removed from Alcaz so that Dr. Weavil could set up shop for the Gates of Ahn'Qiraj world event instead. It has been said that the king will be relocated to an unknown place for the continuation of the Missing Diplomat questline. More on the story here.
It has been discovered that in Patch 1.10 that Varian had been replaced with a elite level 62 monster named Tidelord Rrurgaz, and the sewer full of elite monsters. It should be added, that there is a prison cell next to the Tidelord, leading one to believe that there one day the king will be back in there.
The Goblin Workshop has a nice, one-page overview of the entire "Missing Diplomat" quest chain. Click Alterac Valley to take a look.
MongoJerry on Lurker Lounge has an incredible walkthrough for his journey to the King, pre 1.9, with pictures and commentary. Highly recommended as the most complete exploration chronicles on this fascinating "lost" quest/location.
Varian Wrynn, being a captured king, is of fairly great importance. His whereabouts are explained in the abruptly ended "Missing Diplomat" quest chain.
King Varian Wrynn is the former ruler of the Kingdom of Stormwind. Following his disappearance, his 10-year-old son, Anduin Wrynn, was named king and is visible in the city. Up until patch 1.9, the real King of Stormwind could be found by players exploring the sewer dungeons of Alcaz Island
