Mass Bradley asked In "Hello Dolly", when everyone sings, "It's so nice to have you back where you belong..." WHERE DID DOLLY GO and WHY?
Thank you for the question, Bradley. I also do not remember any mention in the actual story of her being gone or why.
At first, I thought this might be some metaphorical reference to returning from being gone -- such as when a good customer arrives at a restaurant, and the owner says "Welcome back." However, it is clear from the lyrics that she indeed has been gone for some time. She mentions a song being played from "way back when" and then asks the band (or the someone in the restaurant) to "bridge that gap."
Later, she says that she "went away from the lights of Fourteenth Street / And into [her] personal haze." So, perhaps it was some kind of emotional detachment that has now been corrected.
Aside from those possibilities, I am afraid this question will have to go unanswered for the time being.