The Hillmen

"Gnashing teeth and filthy nails Run with wolves with ragged tails Matted hair hung down as veils These are all the Hillmen.
Viscous writhing underground If you run you're surely found Listen close, you'll here the sound Here come all the Hillmen."

Summary

The Hillmen are nasty, savage people living in the Hills of Daltalan making their houses dug out of the hills themselves. They cast off the gods to worship nothing, delighting in the robbing of caravans and kidnapping of innocents to bring back to their holes.
They are aided by powerful shamans that can give these Hillmen the ability to grow as large as the giants to be better suited to raid towns. However, that power can only be attained through the shaman brewing a powerful potion. The potion requires the hair of a child, and the Hillmen will waste no time in taking children from their homes if they've run out of hair.
Children who stay inside when it's dark are far more likely to be protected from these Hillmen.

Historical Basis

The myth came from discriminatory ideas about a group of people from Daltalan called the Brokenmaw, people who had split off from any Tribe or civilizations and made their home in deserted parts of the hills. Because they lived simply and very isolated and seemed rough on the outward appearance, many more civilized people in Daltalan feared them, or at least thought very little of them.
The discrimination against the Brokenmaw started out as making a big stink if they were seen in the wild, as though the "Hillmen" were attacking them, but soon grew into exaggerated tales of their violent shaman powers.

Spread

This is only really told to Daltain children. Anyone in Daltalan might know of the Brokenmaw people, but specifically anyone living in the Hills or on the outskirts would be familiar with this tale.