1. Who created the dwarves?
A callous and uncaring God, who created them only to laugh at their suffering if he or she ever bothers to even notice them at all... (That's you, the player.)
2. Why do dwarves embark?
Have you SEEN what happens to the founding dwarves of new forts? Those that survive will almost invariably become legendaries before economy kicks in, never caring about money again. Communist worker's paradise, baby! When you live under royalty like this, Communism has some charm, especially since it actually WORKS in DF land.
3. Where do dwarves hail from? Is there a capital city? Why can we never see it on the world map? Is it because the embarked don't belong to a "dwarven nation"? Are these dwarven tribes and factions, instead of colonizers of a civilization?
Dwarves belong to a home nation, just hit tab on the embark location screen a few times, and you can even choose which one. The home cities show up as blue on the map to make them easier to find, even, and you can look up the hometown in Legends mode.
4. Do dwarves have a written language with syntax, or is it all pictographs? Do they have a number system?
Well, aside from having all those nouns, verbs, adverbs, and the like in the language raws, you have record keepers who have to keep exact count of the 1769 blocks of granite in your fortress. I'd say that involves a number system. Besides, why wouldn't dwarves have a number system or language with at least the capcity for technical information that smelly humans do, wallowing in their own filth?
5. How many dwarven words are there for alcohol?
Every time a dwarf tries to count, he invariably ends up wanting to go try some of them, and winds up passed out on the floor... the ones who do this frequently get cirrocis, and do nothing else... We call them "Philosophers".
6. How do dwarves feel about the caste system? Do they yearn to be something greater?
Probably not. They don't care about the social status of the work they do, they just care about getting paid and having the money to store neat crap in their room, or get angry when they don't get work, and get evicted.
7. How do dwarves perceive humans and elves? Have they had any significant history together?
Dude, have you OPENED legends mode? Elves are cannibalistic filth that must be scourged from the land. With magma. Sadly, conquering their primitive nonexistant "retreats" is often a trap - not only do dwarves wind up being tricked into immigrating to the new "town" that isn't even a hole in the ground (Seriously, not one hole in the ground! Not even one of those silly surface buildings! It's just freakin' ground! They just sit around all day scratching themselves!), but then the duplicitous elves who "surrendered" plot for the elderly dwarven kings of lore to die of "age" so that they can usurp the throne from rightful dwarven hands.
Humans are a sadly primitive race, but they show some promise, and perhaps even deserve some pity for their inability to work the stone like we dwarves. The ones who drink quite often even make wonderful cannon fodder for the dwarf who braves the road in search of adventure. They are, however, also a potentially very greedy and violent race, to the point of attacking their own allies for personal profit, even at communal expense, which likely explains their lack of understanding the stone and metal of the land. Self-enforced savagry... pitiable, indeed.