Gnomes

In the westernmost part of Andúnë, millennia ago, there lived a people who grew into a large and flourishing civilisation that lived in harmony within themselves and with nature.
Over time, it is said that two different philosophies evolved, one that pushed to improve society through the development of science, crafts and arts, the other that valued exploration, indulgence and shied away from formal academics.
From this kernel of difference in opinion, over the centuries, debates developed into arguments, then into fights and, ultimately, in a complete separation and opposition between people who once were kindred but who now found themselves warring against their former brothers and sisters.
Brought to the brink of extinction, the war waged for decades, before Vaces, the Scales decided to intervene directly, by separating an entire chunk of the continent and forcing the war to a stop.
The leaders of the two opposing factions met in parley, to try and figure out where to go from there, but found themselves unable to solve their differences and to bury decades of grievances.
It is said that Vaces intervened once more, fundamentally altering the two factions to their core.
On this day, which is celebrated by both races, the Halflings and the Gnomes were born.

The ancestral home of the Gnomes is said to be a vast island far away in the westernmost part of the world, though nobody in centuries seems to have been there or know how to get there. After The Sundering , which is how they call the day when they were separated from what would be come the Halflings, the Gnomes evolved over the centuries in a sedentary race of tinkerers, magic users and great admirers and scholars of the Arcane Arts. Many of the eldest treatises that seek to define the underlying logic behind Magic and the Arcane are said to have been written by Gnomes. It was them who first developed many spells in the realm of illusion and who learned to summon creatures from beyond the confines of the Prime Material realm. In time, they abandoned their ancestral home to spread, always in small numbers, across all of Andúnë.
They tend to live underground, to be wiry and bookish, yet of lively character and as appreciative of a good joke or prank as you can get. They seem to be perfectly integrated in pretty much every single one of the kingdoms of the Empire, where they are almost expected to be knowledgeable and cunning. Their diminutive stature has relegated many of them to do the jobs that larger people can't do because they can't get into the smaller spaces or handle the fiddlier bits of equipment, and to the jobs that make more use of their brains and innate magical talents.
The differences they had with the Halflings have long been forgotten and, millennia ago, they have rekindled their relationship with their long lost cousins. In time, they have managed to rebuild their numbers, even though this is not immediately apparent, given how they are spread thin all over the continent.
It is said that their original homeland still houses a distinct and now completely separated civilisation of Gnomes.
In the Empire , Gnomes mostly live mingled with the other races, with very few and sparse settlements that are predominantly gnomish. The common cultural touchstones are the nuclear families they establish, and twice a year they have a Great Meet, where all the Gnomes in the region come together and set up camp somewhere in the plains, for a week of revelries and social re-acquaintance.

Rock Gnomes 
Forest Gnomes