In the earliest days of space colonization, the worlds toward the galactic core were settled. At that time the mineral resources of the galactic core worlds were a rich prize and thousands of huge specially adapted mining spacecraft and colony ships set off to harvest the vast wealth of these inner planets. The manufacturing corporations, making heavy machinery, vehicles, and weapons, also established thousands of plants on these worlds to be near the source of raw materials.
The galactic core is characterized by ancient suns which are dim in comparison with the stars of the spiral arms. Around these ancient stars orbit huge rock worlds rich in minerals, but in most other respects, barren and lifeless. With low levels of daylight sand extremely high gravity, these worlds are inhospitable to most life forms.
The original settlers were miners, engineers, and technicians, and they built their homes deep underground or carved out of the rocky cliffs and hillsides of the world, creating self-contained communities out of exhausted mines. To feed themselves, they constructed huge hydroponic tanks to grow nutritious algae which could then be processed and eaten by the settlers and the communities quickly became self-sufficient.
The high gravity and harsh environment gradually changed the humans that lived there. They grew tougher, more resilient, and they became shorter and squatter. This process took thousands of years, and during that time the new race began to develop its own cultural identity, based upon feudal and guild ideals. When the galactic core was temporarily cut off from the rest of human society by warp storms, the inhabitants banded together into an independent confederation which they called the Homeworlds.
It was during this time that the race became generally known as Squats, though they are also called Dwarfs, and many of them prefer this term. During this period of isolation, the Homeworlds withstood many trials from Ork invasions to rampages of Chaos, environmental disasters, and even internal war between the Squats themselves. The early settlements have been enlarged many times and fortified to turn them into impregnable, self-sufficient strongholds.
With Earth and other sources of technology denied to them, the Squats had to develop their own alternative technologies, using local materials and the vast sources of energy and resources they found their worlds to contain. As they invented and reinvented machines to keep them alive, the Squats acquired considerable expertise. This gathering of knowledge led to the creation of the Engineers Guild, a body of individuals whose technical expertise would provide future Squat armies with many powerful and high tech weapons of war that were unique to the Squats alone.
The Squat Homeworlds have remained independent, and have their own wars against Orks and Chaos, and on occasions, Squats have also fought the Imperium and the Eldar, but by the large, the Squats have allied with humans, and they have no particular source of discord with the Eldar.
The Squats need to trade in order to acquire items not readily available on their own worlds, and so they prefer to remain as neutral as possible. Sometimes Squat strongholds will fight each other over points of honour, or valuable mining rights, but such wars are usually short-lived, being brought to a halt by ancient laws or the intercession of the Council of Strongholds. The Homeworlds rely on the Imperium for most of their trade, but they also trade with the Eldar and even with Orks on occasion.
Generally, the Squats have hated Orks with a passion ever since the ravages of Ork Warlord Grunhag the Flayer, whose surprise invasion cost many Squat lives and wiped out several ancient strongholds. Even today, thousands of years after the invasion, the Squats send out expeditions to try and uncover lost remnants of strongholds believed destroyed by Grunhag's horde. An epic ballad called The Fall of Imbach reminds younger generations of Squat warriors of the heroism of the Squats in those dark times and of the foul treachery of the Ork invaders. The deeds of treachery by the Orks have been recorded in the Book of Grudges for all generations of Squats to read.
The Squats are a hard working and tenacious race, with a strong stubborn streak. They are honorable, and take great pride in paying their debts and in keeping their word. This means they are reliable allies but extremely dangerous foes. If a Squat gives its word to do something, he will do it, even if it takes his life in the attempt. Squats have two characteristics which are hard for humans to understand.
First, they are very materialistic. Squats work hard to acquire money and possessions, and the more important a Squat is, the greater his treasure horde will be. When he dies, his possessions are divided amongst his closest relatives and so pass from generation to generation. A family's treasure is held very dear, it is both a source of wealth and a direct link to its honored ancestors.
The second quality that humans find hard to understand is the Squats' overriding obsession with vengeance and honour. Should a Squat be slain, his whole family is honour-bound to avenge his death, while any harm done to one family member by an unrelated Squat will bring the whole family together to exact vengeance. A harm done by a none-Squat will bring down the vengeance of the whole stronghold. Squats stick together and never forget a slight, no matter how trivial or unintentional. Each Squat maintains his own personal Book of Grudges. Legends abound with examples of lone warriors battling to the death against overwhelming odds for their family's honour, and of individuals returning from apparent death or dishonor to exact lasting and bloody revenge on their foes.
The stronghold is the basis of Squat civilization. A planet may have several strongholds, but rarely more than half a dozen. The warriors from a stronghold are its Brotherhoods, so called because of their close blood relationship and ties of vengeance rights. Strongholds sometimes band together into leagues.
The leader of the stronghold is called the Lord. The leaders of the stronghold's Brotherhoods are called Warlords, and they are usually close relations of the Lord. In battle each Warlord leads a Brotherhood as well as his own personal Hearthguard.
When several strongholds from a league fight together, a Grand Warlord is chosen to lead the combined forces for the duration of the campaign. Election as a Grand Warlord is one of the ultimate accolades for a Squat warrior, and is normally bestowed on the most honored and revered of Warlords. The Grand Warlord leads a disciplined and well armed force made up of Brotherhood warriors and fearsome weapons of war developed by the Engineer's Guild.
The Engineer's Guild is a powerful part of Squat society. Its knowledge and expertise is legendary and its leaders hold many engineering secrets. Many of the techno-magi of the Adeptus Mechanicus believe that the Squats have already learned the secrets of stable Warp fission, by which the energy of Warp space is siphoned off to produce limitless supplies of energy.
The Guild has already developed and produced the most advanced form of propulsion for spacecraft: a neo-plasma reactor powered by a Warp core held in thrall by a containment field of zero energy. No other race has ever duplicated this drive mechanism, the Adeptus Mechanicus have given up their experiments with Warp core technology ever since the infamous Contagion of Ganymede.
The Squats produce many more conventional machines also, including airships, gyrocopters, and gigantic armoured crawlers. All of these machines reflect the landscape of the Squat Homeworlds, where isolated strongholds are separated by hundreds of miles of hostile territory. Shale deserts and chromium drifts, soaring rocky pinnacles, and sheer glass sided crevasses are typical topography on the Homeworlds. To cross this tortured landscape, the Squats have huge Land Trains.
All of these Land Trains are armoured to survive meteor showers, and violent electrical storms. They carry powerful weapons and are used by the Squats as armoured battle stations, mobile versions of their strongholds, able to survive in isolation on a hostile world. The largest of these vast machines is the Colossus, which is also made for the Imperium in a version called the Leviathan. These are huge war machines with extremely thick armour, carrying a large number of powerful weapons and hundreds of troops, and protected by layers of void shields.
The Squats use many armoured vehicles, fast Guild Bikes, and flying machines on the battlefield. They use fast, heavily armed Gyrocopters for scouting and making flanking and hit and run attacks. The sight of a Guild Bike squadron roaring down on the enemy has been known to break the enemy's resolve and create panic among the enemy troops, such is their reputation.
Disclaimer: This history of the Squats is based on histories found in several Games Workshop publications, and is not meant to infringe upon their copyrights in any way.