Jacob/Lee: That's a rather simplistic view of only one part of it.
Transmuting metals was part of its core philosophy in a lot of ways/places, but there were other equally-important things (like finding the elixir of life, or a universal solvent), and it went beyond any of those anyway. Some of these pursuits were even described as being used metaphorically sometimes, for the more spiritual aspects.
Basically, alchemy was the pseudoscientific precursor to what we know as "chemistry", although it was also a spiritual sort of folk discipline. Of course, a lot of this varies depending on the setting.
DF's alchemy needn't necessarily be described as "alchemy", even. Toady has said he's basing it off the Middle Eastern/Muslim style, which makes sense, considering how advanced that area was at time; by the late 9th century, they had already effectively moved beyond "alchemy" into a more scientific form of chemistry, as there were several prominent men refuting the basic principles of Alchemy (transmutation, the four classical elements, etc.) while developing the scientific method, experimental processes, and most of the basic forms of chemical apparatus. Basically, any word in English that's remotely connected to chemistry (or math, sometimes) that begins with "al-" comes from Arabic.
Of course, in fantasy fiction terms, "alchemy" often refers to people actually doing things like creating elixirs and magical potions and transmuting things, and for all we know, DF will have that too.