Dwarves are a race that appears frequently in the series, being a staple of fantasy media since the mid 20th century.
True to their name, all dwarfs are short of stature. For much of the series the wee folk were depicted as bearded men wearing green caps with a white bob, though by the time of VII they ditched the beards as a hard rule and women & children also appeared. Beginning with X, dwarfs were given a Babylonian theme to their clothing and architecture along with green skin.
Nordy the Dwarf is the first of the race to appear in the series, serving as a gate keeper to the mountain chain that separates Asham and Baharata. He is grumpy salt, refusing visitors unless they bear a letter from the king of Portoga.
Dwarfs appear as residents of Rosehill, living in harmony with the civilized monsters and talking animals. The woodcutter who lives near the hidden village uses the same character model as the dwarfs, but this is likely just a way to save ROM space by recycling content.
The Sony PlayStation and Nintendo DS version of the game includes a dwarf serving as the church priest in Pioneer Town. Further remakes require a visit to Rosehill to recruit him to the town rather than showing up automatically.
A small family of dwarfs lives in Faerie Lea, with the younger of the pair being duped by the Winter Queen into stealing the Herald of Spring and halting the changing of the seasons. In the PS2 remake and onwards, he will join the party if visited in the third generation.
A duplicitous dwarf cons the hero and Carver into helping him build a large storage shed next to his home early in the pair's adventure, much to the latter's ire. He does reveal a small tidbit of information concerning Alltrades Abbey, however.
Dwarfs dwell in the Den of the Dwarves on the same island as Buccanham. They are governed by a Foreman rather than a king or a mayor. They maintain their embedded empire by way of a special plant called the Glowmoss, which provides food and illumination in abundance.
The relationship between humans and dwarfs is explored more thoroughly in VII, in both a racial and romantic level. The king of Buccanham courted and married queen Bea of the dawrfs, and her death at the hands of monsters seven years prior to the party's arrival created a sense of deep resentment towards humans among the little people, who felt that Bea would never have been in such a situation had she remained below the surface. Despite the loss of his beloved daughter, the Foreman did not blame her death squarely on Buccanham--a fact that was unfortunately lost on the repentant king.
In the present, the chasm between the races is reconciled through the actions of the party; the diminutive denizens of the Den are exceptionally welcoming of humans, writing off the past hostilities as relics of the past. The current king is married to a dwarf and has moved the royal seat into the Den, turning his former castle into a public casino. The union of the two lines produced a prince and princess of human stature, though the finer details of such are glossed over.
Dwarfs appear as NPCs and shop keepers in various locales, and some also live in Tryan Gully.