Dwarves are actually a race of faeries that live beneath the earth. They avoid sunlight and some are nocturnal.  Their skin looks like marble and they generally have white beards. Young dwarves have a stonelike appearance which supports the theory that they are carved from stone and not born.  Dwarves can transform into stumps or stones. Dwarves are hardworking and value bravery and loyalty and despise being tricked. They live very long lives and death makes them sad so they make beautiful creatures that are lasting. Dwarves can forge any metal and are excellent craftsmen.
* photo courtesy of Arthur Spiderwick's Field Guide