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In many ways.
1). They have a dragon. There are already three dragons in the game (Necropolis, Dark Elves, and Elves). The Dwarves have the fourth.
2). Dwarves use overpowered runes, hence the imbalance.
3). Dwarves are a completely uninspired race. There is nothing about them that would captivate you. The Mages have a flying castle, the Dark Elves have a matriarchy and decadence, the Pikemen have half-naked maidens, the Necropolis has an entire cult dating back to Heroes 3, the Knights have valor and spirituality, the Elves have a beautiful city and are beautiful themselves. Even the Demons, with Agramon, are quite captivating. But the Dwarves are just some kind of old, boring race.
4). They are the only race out of all where there are many humanoids at all levels, from 1 to 6.
5). And they also worship a dragon. This is utter nonsense. I read that the Dwarves worship Thor, and his hammer is sacred to them.
All of this suggests that they are underdeveloped and were made in a hurry, and therefore have no right to exist. I understand that the developers needed a race for the snow, but now the Barbarians have taken that place. Dwarves must die!
2) Why are they considered overpowered? What about mini-artifacts? What about other possibilities of other factions?
3) Why not??? Look at their (Dwarven) castle – it's such a combination, such a view: a deep mine, magma, snow, and a calm river! What a sight!
4) I agree with this.
5) Dwarves are a fantasy race, so you can do almost anything with them, especially since each race, or almost each race, worships elemental dragons.