After the creation of the planes, the gods created the Dwarves in order to represent themselves on the mortal world. This was before humans, and elves, and the like were even a thought.
The Dwarves built a successful mountain empire under the rule of Gahlmund Druna, first of his name. The vast empire grew at such a rapid pace that he could not keep the citizens fed.
The Great Gahlmud turned to his gods for help. They bestowed upon him the Instrument of Creation, The Essence of Mortals, and the Compass of Desire.
The Essence of Mortals was used to detect danger to the Mortal World. The dwarves fashioned it into a belt, with a shining ruby. With the belt, Gahlmund could summon the energy created by their their plane of existence and use it whenever the danger was detected.
The Instrument of Creation was a massive tool, that could be used to shape living things. The gods demanded that the dwarves never use their gifts to create other beings of intelligence. That is the realm of the gods, and should be left to them.
Instead the dwarves built dumb and capable species to fit the needs of their empire. They created the elves and humans to do their menial labor. They created halflings to play with their children. They created the Minotaur and countless other species to plow fields, build homes, and take care of any taxing labor.