Gnomes

Gnomes are a mysterious race that lives in the deep woods, within trees and shallow earth. No capital is known to the other races, but it is widely believed that within the deepest forests one can find a magical city of gnomes.
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Creatures of nature, they are known to do little impact upon the world and are rarely seen by humans.

They are often seen collaborating with forest creatures and wielding powerful and unknown magics that of which they do not disclose to even the Dwarves which they maintain a friendship with; the gnomes providing expert crafts even to the dwarves, as well as lending their magically abilities, while the dwarves offer protection and resources. They are more similar to humans than to dwarves despite what the average viewer may see.
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The size of the gnomes varies from around 1-2 feet tall, with rare births of gnomes the size of mice.

Nearly all of them wear pointy red caps and have lightly colored facial hair

The powers of gnomes are unknown to most, with dwarves only knowing very little despite their relationship. Reported magics include:
 * Magic
 * 1) Healing
 * 2) Manipulation of Nature
 * 3) Various Boons
 * 4) Invisibility & Illusion
 * 5) Tame Wild Animals