The False Dwarves are a race of robots. They were presumably created by some other race, but now make copies of themselves.
As the name would imply, they appear identical to dwarves. At least, they appear identical to dwarves to everyone except dwarves (and presumably themselves). Indeed dwarves generally find them terrifying, to the extent that most dwarves are unable to remain in the company of one.
Like many other robots, they are immune to various kinds of magic that directly effect the soul (such as spells to cause one to fall in love with a specified person). On the other hand they are vulnerable to water, and may be dazzled by extremely bright light.
Aside from their method of reproduction their behaviour, personality, and culture are in all apparent respects identical to those of true dwarves.
(my thanks to Mr J. Maliszewski for his initial research on this topic, which may be read here, here and here).