RTF is a global modification that replaces all towns in the game.

I understand, I just haven't encountered dwarves before... I'm not familiar with them.

There are dwarves in the game.
If you remember the cutscenes in the "Hammers of Fate" campaign, the Haven hero Duncan is shown in a cutscene next to the dwarf Hangvul (or another dwarf)... the proportions are clearly visible...