Are you asking why it wears out, or what happens when it wears out? If you're asking why it wears out, all moving parts will eventually wear out due to friction. The only thing keeping the moving parts from wearing is a thin coating of grease, which is bound to wear out eventually. As far as what happens when it wears out, the metal on metal contact eventually causes enough wear that there is a lot of play between the bearings and the race. This lets the wheel shimmy and shake, and I suppose ultimately fall off.
