Which is all well and good, but it got me thinking: what is the only elves and dwarves in a setting did exist in small, armed camps, without the implied well-settled homelands from which peasants spring? It got me thinking in a Tolkeinesque vein, with both elves and dwarves beleaguered and dying races. The elven fastnesses are the last remnants of once-great elven civilizations, guarding sacred sites, places of great natural beauty, or things which they are bound by ancient oaths to keep sealed away from the mortal world, offering their council to men ere the time comes for them to board the last ships to the Grey Havens. The dwarven reputation for hoarding gold, gems, and objects of great value has been the undoing of their cities, drawing dragons and other powerful and covetous monsters down upon their heads. The led to a diaspora, which cost the dwarves dearly in numbers at the hands of goblins, and now their small vaults are spread thin enough for the risk of dragon attack to be ameliorated... but any dwarven domain too successful may draw the wrath of wyrms.
A couple of other fun implications and interpretations:
- Lots of abandoned elven cities and dwarven mountainhome megadungeons!
- Elven nightblades are outcasts from the Grey Havens, or those tasked with long-term fulfillment (or prevention) of prophecies in human lands
- Racial level limits are because the power of the race is failing; they can no longer fulfill the potentials they once could.
- Should a PC elf found a domain, the peasants he gets are actually 'families' of the wee fey; leprechauns, gnomes, brownies, sprites, and what-have-you. Not true elves.
- Should a PC dwarf found a domain, I either need a "Dwarf Fortress events table of suffering" or it gets settled with human peasants or something.