Paraphrased from the magmawiki.
Dwarves are "intelligent", alcohol-dependent, humanoid creatures. They are well known for their stout physique and prominent beards (on the males), which begin to grow from birth; dwarves are stronger, shorter, stockier, and hairier than the average human, and have a heightened sense of their surroundings. Dwarves live in elaborate underground fortresses carved from the mountainside, are naturally gifted miners, metalsmiths, and stone crafters, and value the acquisition of wealth and rare metals above all else.
Dwarven civilizations typically form peaceful, trade-based relationships with humans and elves, but are bitter enemies with goblins. Dwarven babies become children one and a half years after birth, grow up to become adults at their twelfth birthday, and live to be around 150-170 years of age.
Well-trained dwarves are a menace in combat; they are the only race that can enter a martial trance when beset by multiple foes, granting them a major combat advantage, and their emphasis on mining and metalworking ensures access to the best arms and armor. While they can and do field (sometimes) capable cavalry, thier stature often results in them still being considerably poor riders compared to humans and the slightly taller goblin, and they also consider mentioning their diminutive stature an insult. But this does also ensure they tend to have the best trained and equipped foot soldiers available.
In their fortresses and mountain halls they have accumulated treasures of gold, silver, and precious stones, and pass their time fabricating costly weapons and armor. They are famed miners and smiths, although, like humans, they can specialise in any number of trades. Generally shorter than humans, they are on average stockier and hairier, and usually sport full beards. Though slow runners and poor riders, dwarves are excellent warriors and defenders of their strongholds.
Morally speaking, dwarven ethics most closely resemble human and elven ethics. Dwarves find the devouring of dead enemies unthinkable, and will not butcher or consume intelligent beings. They are entirely opposed to torture of any sort for any reason. Dwarves tolerate animal trophies but shun those who keep trophies of sapient beings, and find those who keep trophies of other dwarves appalling. Dwarves find the killing of animals, enemies and plants completely acceptable. An exception to this is the killing of neutral beings, which is sanctioned as long as the killing had been officially ordered. A dwarf found to have participated in assault, theft, trespassing or vandalism will be seriously punished; some crimes such as killing other dwarves, breaking oaths, slavery and treason are punishable by death. On the other hand, lying is considered a personal matter.
Dwarves have accumulated a reputation for being slow-witted. The instances of dwarven stupidity are numerous; examples include dodging into thin air (off of cliffs and into rivers), never accounting for water flow (and being swept off of waterfalls to a watery grave a hundred feet below), always taking the easy paths (even through a pond poisoned with toxic forgotten beast blood), building constructions from the wrong side (trapping themselves within), digging out the floor one is was standing on, wandering off to do dangerous things (collecting webs when a giant cave spider is visibly lurking), and generally disregarding dangerous circumstances (carrying back friendly corpses even when the goblins that have rendered them horizontal are a mere two feet away).
The problem is further compounded by dwarven touchiness; they easily become depressed, throwing tantrums that spiral out of control for what seem like minor reasons (e.g. a temporary lack of unworn socks). This inevitably leads to the overseers' emphasis of the "dwarfy": failsafe design, machinery in place of dwarfpower, fun with magma, seizing control of the environment, killing all the cute fuzzy animals, strip mining the whole place hollow, etc. It is a great insult to be called an elf, implying that the dwarf is apt to sit around and gaze at trees, living in the world rather than bending it to their will.