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Dwarf is a new mob added by Better Dungeons. Dwarves are small hostile mobs that appear to resemble small people (players). The Dwarves have 25 HP. Dwarves currently have no death animation.
Dwarves spawn in a volcano, from spawners. These spawners are situated around chests. It is set up so that in order to get the rewards from inside each chest, you usually have to get past one, two, or maybe even three or four Dwarves. Dwarves also spawn elsewhere besides chests, though there is always at least one spawner by every chest.
Dwarf - Regular Dwarves are equipped with Iron Pickaxes which deal 4 damage (2 hearts) to an unarmored player. Sometimes they spawn with feathers on their heads. As you delve deeper into the Volcano, going past the Netherrack stair entry area and getting into the Dwarven stronghold, you'll see Dwarves spawn with Chain, Gold, Iron, and even Diamond armor. With Gold and Chain Armor, the Dwarves have Iron Picks, with Iron they have Iron Swords, and with Diamond they possess Diamond Axes
Dwarf Defenders - Defenders spawn just like normal Dwarves, though Defenders are equipped with Shields, giving them blocking abilities.
Dwarf Healers - Healers possess Iron Picks as well, and as the name implies, they can Heal other Dwarves for 2 health points per Heal.
Dwarf Grenadiers - Grenadiers have Iron Picks, but also throw specialized Potions which do a little bit of damage (0.5-1 heart) and give the Player Slowness I for around 10 seconds.