Someone who has modded the game so Dwarves can attack should answer this one: How do the dwarves fare when they get aggressive? We get access to steel. We, the players, can mine out Adamantine and use it. Dwarves get major advantages, especially now that we get mercs from other races (many larger than us) that we can deck out in our advanced metals. Unless our chosen race sucks at the offense, I'd say they got made passive to avoid them roflstomping their way through other countries like the Germans at the beginning of WW2.
That being said, it might be more exciting going through a world where a Dwarven blitz stormed most of a continent only for a goblin or elven site to completely alter its laws and turn the tide. Or when boats come out we might see dwarves break everyone else on their continent and piss off the wrong people somewhere else who come in and stomp them into the ground.
In my own experience, and you could say from a unmodded experience too, is that the dwarves are pretty strong (fight's aren't really calculated on metal vs metal) in having decent lifespans to learn their craft but this is also their downfall for pseudo sterilising their race in small numbers with lots of incompatible & variably aged dwarves.
As goblins and elves are immortal and marry & breed at a pace indefinitely (unless toady adds a worldgen childbearing cap to stop superhuge families) so while it is slow to pair up a small population into married couples, once a large enough population gets going they have a sustainable flow of population (a goblin or elf commune in very small numbers can become sterile from odd immortality ages if similar ones are killed off). Dwarves have long lifespans which complicates getting married before they die in finding someone while they are middle aged or young in which to bear children with, as they will probably not survive having more than one child later in life.
Humans on the other hand have short lifespans but the window in which they can get married is much much wider, which means that they breed extremely fast. There are lots of humans living as peasants, communally without homes in villages just waiting to be drafted.
A 1000 wide human army may invoke catastrophic losses upon itself, but will eventually overwhelm a 250 strong dwarven army as swarm tactics often works better. As battles get better & more simulated off more reliable factors than skill roles & how many men you bring to the fight we might be able to get a more reliable picture of how good the dwarves are at fighting.
> Remembering that the dwarves have the capacity to conquer settlements already by using a forced overseer [CONQUERED_SITE] noble, so you could go around flipping hostile human settlements so you can get a influx of natural migrants/merchants residing in your human town if they aren't all put to the hammerer.
> Goblins also take slaves from raided/conquered sites in worldgen, so we'll have to see if this raid system respects those rules in relocating persons, and said relationships of people barging onto your site to recover family. (Just incase you want to play the bad guy)
*Raids and conquers site, since it is cheaper than building a new hillock*