The Folklore of Discworld by Terry Pratchett and Jacqueline Simpson

Germanic areas. There, tradition tells of a race of small beings who live inside rocks and under mountains, and are so skilled in metalworking that they make magical weapons and rings for the gods themselves. They are old, wise, and very rich. Female dwarfs are never mentioned (unlikeshe-elves and giantesses), so one must assume that on our world, as on the Discworld, they looked just like the males and worked at the same crafts. Although in later centuries the names for various types of small supernatural beings have become seriously confused, one can be sure that those that inhabit human mines (as gnomes and kobolds do in Germany, and knockers in Cornwall) and those that work as smiths are kin to the true ancient dwarfs.
    One need only look at the names, nicknames and patronymics of many Discworld dwarfs to find confirmation of this link with Nordic and Germanic dwarfdom – from their ancient king B’hrian Bloodaxe to the modern Albrecht Albrechtsson or Bjorn Stronginthearm, there are echoes everywhere. Other dwarf names (Ringfounder, Helmcrusher, Hammerhock) allude to battle prowess and craftsmanship. But from time to time, curiously unsuitable ones occur, such as Cheery, Snorey, Dozy, and Bashfull; these must be due to some alien influence, possibly that which affected the Discworld during the time when moving pictures were being made at Holy Wood. It was certainly at that time that some dwarfs first felt an urge to sing the irritating, and previously unknown, Hiho Song (which is utterly undwarfish, since it does not mention gold and is less than an hour long).
    These are only the upper levels of their culture. To understand the nature of a Discworld dwarf, one must dig much deeper. There, dwarfish identity is not defined by mere genetics and size, but by a whole complex culture of laws, taboos, customs, moral principles and traditional knowledge. It is not precisely a religion, but it is as vital to their sense of selfhood as any religion could be. Height, in Discworld dwarf culture, plays no part in defining a dwarf. Dwarfishness is about what you do, not how high you do it. Captain Carrot Ironfoundersson, for example, happens to have been born of human parents and to be well over six foot tall, but his upbringing has made him socially and spiritually a dwarf. As he explains to Vimes:
    ‘Adopted by dwarfs, brought up by dwarfs. To dwarfs I’m a dwarf, sir. I can do the rite of k’zakra , I know the secrets of h’ragna , I can ha’lk my g’rakha correctly … I am a dwarf.’
    ‘What do those things mean?’
    ‘I am not allowed to tell non-dwarfs.’ [ The Fifth Elephant ]
    The legal aspects of this culture are known collectively as kruk . Outsiders think of this as ‘mining law’, which is true as far as it goes, but as Carrot explains:
    ‘It’s a lot more than that. It’s about … how you live. Laws of ownership, marriage laws, inheritance, rules for dealing with disputes of all kinds, that sort of thing. Everything, really.’
    Each dwarf mine 4 has its own ‘king’ (a title roughly equivalent to ‘chief engineer’), but in disputes where the kruk is unclear the final arbiter is the Low King, whose authority extends over all dwarfish communities. He is chosen by the senior dwarfs, usually from among the leading families, and is crowned sitting upon the Scone of Stone. He must sit on it to give his judgements, as all Low Kings have done ever since the days of King B’hrian Bloodaxe, fifteen hundred years ago. This scone is the supreme example of a traditional dwarf bread – a highly prized product used by dwarfs as a food of last resort, and regarded as utterly inedible by all other races. It also serves as a weapon. Some observers claim to have seen it being fashioned with hammer and anvil. Specimens kept in museums for decades, if not centuries, show little change from the day they were baked. That, however, is not why the Scone is held in deep reverence and guarded with the utmost care. King