During Gamescom, the World of Warcraft team confirmed that Karazhan will be returning to the game in patch 7.1: Return to Karazhan. Karazhan will be a 5-player dungeon that wraps up the Stormheim location in the Broken Isles, the central location of the Legion expansion. The information was released by an attendee via this Reddit thread.
Other information gleaned from interviews with the WoW team includes:
Karazhan was originally a 10-player raid released during The Burning Crusade expansion.
Blizzard released a new trailer to tease out the Karazhan dungeon featuring everyone's favorite butler, Moroes, and the possible return of The Guardian of Tirisfal, Medivh, which would be amazing. Check it out!