I played a fantasy game (on Nintendo 64!) that had a lore waaaay too ridiculously deep for itself, but part of it was that a vaguely dwarvish race had dwindled to a single city via repeated wars and pogroms from other races, and were living under the protection of one of the large human kingdoms at the time. These dwarves were also secretly harboring the last known dragon in the world, who had given magic to humans about a thousand years ago.