Indumentitis

Indumentitis is a skin condition caused by an infestation of female hair mites, a microscopic parasite which burrows into the skin of its host. The mites latch on with their pincerlike mandibles and feed on the blood of the host. In the process, they extrude a long, fibrous filament not unlike the curly hair you'd find on a halfling's foot. They prefer to settle on areas of the body which are often exposed, such as the neck, face and hands.
Before they latch on to their newfound host, the mites can lay up to a hundred eggs in cavities they dig inside the skin of the host. Once they begin feeding, they stay latched on until they reach the end of their life span, or are forcibly removed by ointments or spells. A dead mite will retain its grip for several months, until its body is devoured by other small organisms.

Occurence

Hair mites are native to the Underdark, where they skulk in narrow tunnels and wait for suitable hosts to drop on to. Much of the local population is thoroughly infested by these parasites, but the species tends to not survive in the surface world. Contrary to popular belief, dwarven women are not inherently hairy, but the ones who dwell in caverns often sport impressive "beards" of such mites.

Cultural significance

Travelers to the Underdark are often caught unaware by the condition, and if the infestation sets while they are far away from civilization, one might be stuck for a long time without a cure for it. While those who prefer a more trimmed look might abhor the mites, there are also those who knowingly seek the creatures out to fix their patchy or nonexistent hair or beard.

Don't see what Qira's so upset about. Yesterday she was the one scolding me for stepping on a bug, now she's hysteric that she's got a few extra passengers on board. Mites never hurt me, and honestly, the beard fits her better than some lads I've seen. It's like she said - live and let live!

— Drummyl