Introduction: The Small Folk (CBGH)

The Complete Book of Gnomes & Halflings
Why a book for the small folk? And what do gnomes and halflings have in common that warrants their inclusion in a tome together? The answer to the second question lies in the first, for it is the diminutive size of both these popular races that is the most significant factor in the way they cope with their environment.
The worlds of the AD&D® game can be frightening and overpowering even to characters broad of girth, potent of magic, and possessing strength great enough to face many of those worlds' challenges. Imagine how much greater the danger to beings of small stature, limited strength, and little or no magic.
This is the environment faced by the gnome and the halfling. It is a world teeming with larger races, each of whom claims its niche and jealously guards its prerogatives: prolific humanity, with its potent wizards and powerful clerics; dour dwarves, with their mighty fortresses and their doughty fighters; enchanted elves, masters of the woods; not to mention the monsters—giants, trolls, goblins, ghosts, and dragons—that lurk every  where.
To counter these inherent disadvantages, and to make and keep a place for themselves in a hard world, gnomes and halflings long ago developed several traits that allow them not only to survive, but to flourish. Common to both races is an instinct for avoiding direct conflict when possible. Just as valuable is a gift for being unobtrusive. But most important of all, perhaps, is the open-mindedness both halflings and gnomes show in their dealings with members of other racial groups.
Despite the many traits they share, gnomes are not halflings and halflings are not gnomes: each race remains distinct unto itself. Consequently, this book is divided into two major sections—one about gnomes and the other about halflings. These sections contain all a player or DM needs to know about the society, character, subraces, and kits of these diminutive demihumans.
Still, it's worth thinking about a few considerations that apply to both gnomes and halflings, especially those that relate to their size (which is small not just in comparison with humans but most of the other intelligent creatures with which they share their world). These are the traits of the races that are most useful to players, as well as important hallmarks of any all-gnome or all-halfling campaign.
==Cooperation==
Gnomes and halflings both have learned the value of cooperating with members of other, larger races. Halflings typically carry this interaction farther than do their bearded cousins, but gnomes, too, understand that alliances and friendship make for more prosperous neighbors than do feuding and war. Members of both races are not inherently adverse to making business deals with dwarves, humans, and elves—or even humanoid monsters, provided there is no inherent racial antipathy. Even where such enmity exists, as between gnomes and kobolds or goblins, it is usually the result of competition for living space; in settings where this traditional bone of contention is absent (as in the AL-QADIM® setting of Zakhara), gnomes find it easy to befriend even these traditional enemies. Naturally, halflings and gnomes alike will be cautious regarding offers of mutual cooperation from those who have been active enemies in the recent past, but at least they will give such offers a fair hearing.
Alliances: The value of a military pact with a strong neighbor is an obvious one to any race. The trick, however, is to avoid the smaller partner being dominated or swallowed up by the larger. The small folk have developed diplomacy into an art and are adept at being able to negotiate mutually-beneficial pacts with a variety of their neighbors. For example, elves and dwarves might ally themselves with different groups of humans but not with each other, while the humans probably will have trouble getting along even among themselves. Halfling or gnome communities in the same area are quite likely to have mutual assistance agreements worked out with the above mentioned dwarves, elves, and several of the human nations. Of course, these pacts will apply to outside threats only, as the small folk have no desire to get involved in the internal power struggles of their neighbors.
Even in cases where no military alliance is formed, a community of the small folk will strive mightily to maintain peace with its neighbors. Halflings and gnomes will readily suggest or agree to negotiation over points of contention, and they are capable of carrying on these talks for a very long period of time. If a group of humans decides to resolve an issue by force, the small folk will probably agree to the terms without violent resistance unless a matter of strong principle is at stake. However, even in acquiescence the halflings or gnomes might find a way to make the human victory a hollow one.
Say, for example, that a small patch of forest forms a common border between a human town and a halfling village. The halflings will strive to see that the woods is preserved and shared, even to the point of bestowing upon their neighbors gifts of game, mushrooms, and nuts from the woods. If the humans suddenly claim the woods as their exclusive property, the halflings will spend a long time trying to talk them out of this selfish notion—and they'll continue to use the woods as they always have for so long as the talks last.
If, however, the local human ruler issues an order barring halflings from the forest and sets guards around it to see that he or she is obeyed, the halflings will probably resort to discreet poaching, using their skills at moving silently to evade the guards. Ironically, without the tending of Forestwalkers and Leaftenders (see the halfling kits), the forest will produce much less—and the humans probably can't even find the mushrooms! Within a short time, the woods will become a wilder, more desolate place. Thus, both sides suffer from the humans' greed, and—if the friendship between the communities is maintained—the halflings will hope that in a few years the human policy can be reversed.
In an extreme case, where the human ruler decides that the woods should be cut down and the lumber used to build him or her a new summer palace, the halflings might be driven to more dire resistance. If the forest is really important to the community's survival and identity they may feel compelled to fight for it. Rather than declaring war on their neighbor, they will sabotage logging operations, waylay small parties of loggers, and generally make the project too time consuming and expensive for the humans to continue.
In all cases of possible conflict, halflings will first try affability, progressing from there to passive resistance, and only resorting to guerrilla warfare if all else fails. Gnomes (especially Rock Gnomes) are somewhat more quick to anger under mistreatment, but they too will never be the aggressors and will gladly end hostilities at the very first opportunity. It's easy to underestimate the small folk, but they make tenacious foes to those who insist on becoming their enemies.
Intermingling: To varying degrees both kinds of small folk are open to the cultures of other races, whether this means individual gnomes and halflings living amongst humans, dwarves, and elves or accepting members of the "Big Folk" into their own communities. Between gnome and halfling, a member of one group will be warmly welcomed and feel quite comfortable living among or visiting the other.
When gnomes or halflings live among another race, say in a populous city, they are adept at retaining their old customs while adapting them to the traits and peculiarities of the people around them. The hearth, so essential to the halfling, or the fire without which no gnome dwelling would be complete, will be found any  where a member of the respective race calls home—even if "home" is a corner in a crowded tenement and the hearth a mere candle or a tiny flame nourished within an oilpot.
At the same time, the small folk will venture forth, sampling the city's wonders, exploring its corners bright and dark, and as likely as not making a few friends in the process. Within a short time after their arrival, chances are that they will be productive and popular members of the urban community.
==Fighting Small==
When courtesy and elusiveness both fail and the small folk are forced into combat, they are adept at using their size to their own advantage. Whenever possible, halflings and gnomes will choose to fight in an area where larger creatures are hindered by overgrowth, low ceilings, or narrow constricting passages. Gnomes are particularly skilled at fighting giant-class creatures, using their small size and nimbleness to gain the  -4 bonus to Armor Class against them; halflings employ their Dexterity in other ways and have mastered the use of small missile weapons so that they can do battle with larger creatures before those hulking brutes get close enough to grapple.
In their homes, villages, burrows, and warrens, the small folk will often prepare an escape route that is only large enough to let a gnome or halfling squeeze through. If these crawlways are framed with sturdy stone entrances, they can effectively block pursuit by larger creatures—and even if they're merely dirt, the time and effort needed to expand the tunnels often allows the fleeing gnome or halfling family time to escape.
In any conflict, the rules the small folk rely on to survive are easily summed up: never lose your head, take advantage of the Big Folk's bulk and clumsiness where possible, and, when all else fails, run away.