D20 3.root(-36): Races: Dwarf

If elves are tough to bring into a fantasy setting because there are simply too many kinds and too many people trying to do their own thing with them, dwarves are tough because no one does anything different with them. Dwarves are hardy and humorless. Dwarves are stoic and live underground. Dwarves mine gold. Dwarves are strongly traditional. Dwarves are master smiths. Dwarves don't like magic, and are resistant to it. Dwarves have no magic of their own, or what magic they have is linked to earth, stone, and metal. Dwarves wield axes, picks, and hammers. Dwarves all have beards, sometimes including the women. Dwarves always speak in a (bad) Scottish accent. Dwarves are all alcoholics. Dwarves don't like elves. 

Enough dwarves that are all the same. If dwarves live in mountains, maybe they offer the use of their caves to others as trade routes. Maybe dwarves are traders themselves. Maybe dwarven traditional music and dwarven traditional art are classics, and in high demand in the cities. Maybe dwarves are starting to move into the cities, because their art is in such high demand there.

For that matter, maybe gnomes and hobbits halflings are related to dwarves. Maybe they are just different types of dwarf. Maybe the gnomes are the dwarves who are master smiths, as well as master magicians. Maybe halflings, as described in The Hobbit the source material, are jolly folk who prefer a song and good food to adventure, even if there are occasionally Tooks unusual folk who are better at burglary than enjoying life, and this shows in the halfling attitude to adventure: keep spirits up and enemies distracted.

Dwarf (Default Variant: Mountain)

• +2 Charisma, -2 Wisdom
• Medium size.
• Darkvision 3: You are only dazzled or blinded in darkness three levels deeper than normal.
• Dwarf subtype
• Natural Compass feat
• Favored class: Face
• Speed: 10 ft.
  

Gnome-variant

• +2 Intelligence, -2 Wisdom
• Small size
• Dwarf subtype
• Occult Initiation feat
• Favored class: Artificer
• Speed: 10 ft.
  

Halfling-variant

• Small size
• Dwarf subtype
• Proficiency: Sling and Dagger
• Favored class: Bard
• Speed: 10 ft.
  

Dwarf subtype

• Indicates that the creature is a dwarf.
• Stability: Dwarves have a +2 racial bonus on Power saves.
• Locational Sense: At character creation, select a terrain type. While in that terrain type, a dwarf automatically detects any unusual terrain features.