Dwarves are not a common race in the world of Daventry, but do exist throughout the world. Dwarves are distantly related to dark elves and Gnomes. They are generally mistrusted, like all of the shorter races, despite the fact that many Dwarves are actually benevolent. Most Dwarves enjoy toiling beneath the earth and thus make excellent miners.
There are some distinct subraces of Dwarf, including Fire Dwarves.
Most dwarves are bearded but there are exceptions. Fire dwarves in particular.
Dwarves are a race in the King's Quest series, appearing in King's Quest I: The Quest for the Crown, King's Quest II: Romancing the Throne (and it's unofficial remake by AGDI King's Quest II: Romancing the Stones) and King's Quest IV: The Perils of Rosella.
The dwarf that appears in KQ1 on Sega master system is not bearded.