The Dwarves of Avlis were the first native race to walk the world, created by Gorethar with the help of Clangeddin. The original race of dwarves were the Galdokin, who remain today in their ancestral home of Galdos. The very closely related, but more social, Dubgaldokin are the type of dwarf known best to other races. A third, newer, subrace of true dwarves are the the Kharakuro.
Gnomes are not dwarves at all, but are distant descendents of the original Galdokin. Gnomes and true dwarves can interbreed to produce a hybrid race referred to as Stone Dwarves.