Hi, first of all, the correct sentence is: "¿Dónde está el baño?" or "¿Dónde están los baños?" if you are speaking in plural.
People usually speak the least possible, so in some places it is likely that you will hear something like "on' ta'l baño", especially since they want to go to the restroom! Saying only 4 syllables.
Now, in Spanish (I don't know in English), there's this stylistic device called "sinalefa" which allows a poet to merge the last syllable of a word if it ends with a vowel with the first of the next one if it begins with a vowel again, so the verse can fit better in some contexts.
-Su ma-no es gran-de
-Su ma-noes gran-de
In spoken language we tend to do this, as you correctly noted in your question.
When we speak fast we merge syllables without noticing. this happens in every Spanish variety. That's just how people speak, sometimes is hard, but once you master it you'll be able to understand a lot! Good luck!