Dwarves are natives of the Veiled Lands. there they lived with gnomes. When the Azures came to Railou they went to the Veiled Lands and fought with dwarvish armies. When Azure forces broke into the city all the Dwarves stayed back to fight the Azures while the Gnomes fled.
Dwarvish prisoners were brought to Malere by the Azure to serve as laborers and craftsmen.
When dwarves lived with gnomes they had no need to be tinkerers and craftsmen, but when they were forced apart each race took up the role of the other.