The dwarves are a short, stocky race who dwell deep underground, beneath the realm of Nidavellir. While some sources consider Nidavellir to be an extension of Svartalfheim, the realm of the dark elves -- most number it independently amongst the Nine Worlds. Nidavellir is the mountainous home of the dwarves, a harsh unforgiving land that is rich in gold, gemstones, and other minerals. It is also remarkably inhospitable on the surface.
Dwarves are said to live a long time -- hundreds and hundreds of years. They are physically powerful, possessing a strong constitution and remarkable energy -- able to work long hours directly in the heat of their mighty forges. It's not clear what dwarves eat, although they consume vast quantities of alcohol, bread, and other human foodstuffs. Despite stories to the contrary, they do not eat humans, although the dwarves themselves cultivate that rumor to keep away trespassers.
The dwarves live underground because they cannot abide the sun. If even a ray of sunlight touches a dwarf, he is transformed instantly into stone for all eternity. This weakness prevents the dwarves from settling above ground, and so the small men live deep under the earth, carving out vast kingdoms in the dark regions of solid rock beneath our feet.
Over time, dwarves have learned to create small, magical red caps named Tarnkappes. While wearing a Tarnkappe, a dwarf is rendered invisible, and therefore cannot be touched by sunlight. A prized gift, the magic of a Tarnkappe works for anyone and so special friends of the dwarves are sometimes given Tarnkappes.
Dwarves are a race of master craftsmen. Working in metal or stone, virtually anything can be created by the hands of a skilled dwarf. Working long hours in their forges, these expert artisans create the most wonderful works of art, sculpted from gold, silver, and precious stones. Dwarves can also work cold iron -- creating magnificent weapons of war as well as more common, household crafts such as pots, pans, and utensils. There are also master sculptors, shaping rock the way others might work clay.
Possessing a deep understanding of magic, the dwarves can create permanently enchanted, magical items. They created Thor's magic hammer, Mjolnir; Odin's spear, Gungnir; the magical golden ring Drapnier, which creates eight copies of itself every ninth day; as well as many other wondrous objects. In particular, the dwarves created Goddess Freya’s remarkable necklace Brisingamen. Of course, the dwarves were loath to part with that particular item, bargaining with the Lady for her charms.
Dwarves rarely interact with the other races, being considered sullen and taciturn by the more jovial humans and elves. Even though there are master craftsmen, dwarves are considered to be lesser beings by both the AEsir and the various communities of giants. Still, everyone comes to the dwarves when they need something created or repaired.
Fierce warriors when their homes are in danger, the dwarves fight with great hammers and magical swords, and they often turn the tools of their forges into weapons. While they are at a disadvantage fighting on the surface, none can match the power of the dwarves as an army under the ground.
The race as a whole is considered to be neutral, neither particularly good nor overwhelmingly evil. Of course, there are individual dwarves such as Andvari who are considered truly wicked. Andvari’s entire store of gold was stolen by Loki to ransom Odin and Hoenir. Loki even took Andvari's golden ring, which the dwarf cursed so that it would destroy its wearer. This set off a chain of events involving dragons and heroes, Valkyries and the gods themselves, destroying Sigurd and ultimately the family of the Nibelungs.
