- Being short
- Having a high birth rate
- Living in crowded communities
- Eating voraciously
If you said "goblins," you are correct (and lazy, because you read the post title). If, however, you said "halflings", you are also correct (and are quite astute).
What's interesting about these two races is that, in Pellatarrum, they are the same species.
As mentioned earlier, the origin of the halfling race is not generally known. They were not present when the Elder Races appeared, nor were they created to be servitor races. They just appeared one day.
Goblins, on the other hand, are assumed to be one of the many races that the orcs created for their great armies. If the great civilization of the orcs had not been toppled and their history lost to the ages, it might be possible to discover that no, goblins were not specifically engineered alongside ogres, bugbears, hobgoblins and the rest. They too just appeared one day and were drafted into the orcish legions.
(In the orcs' defense, there were dozens of races being created, and it was difficult to keep track of them all. Besides, the goblins wanted to join.)
The Great Secret
What the scholars and historians seem to forget -- or keep overlooking -- is that there are six elemental planes surrounding Pellatarrum, not just four. The Positive and Negative Energy planes are also elemental, embodying the primordial forces of Creation and Entropy.
Is it any great surprise, then, that on a world which was purposefully designed to exist on an elemental nexus, representatives of Life and Death should manifest? Life ex nihilo is Positive Energy's stock in trade, and Pellatarrum is bathed in that radiance. Similarly, where there is light there is shadow, and therefore incarnations of entropy also were begat.
This is, incidentally, why no kobold has ever kidnapped a halfling (or goblin) child: they cannot be cross-bred. The purity of their lineage prevents the dilution of their seed.
However, this raises a far more interesting question: what happens when you cross a halfling with a goblin?
Answer: a dead body. There is never any kind of socialization between the two peoples. There is never any sex, just rage and murder and hate.
Fear and Loathing
Halflings and Goblins hate each other on a level that makes "genocidal" seem like an understatement. To understand why, you must first realize how closely they are related.
Make a halfling feral and cannibal, and you have a goblin. Bathe a goblin and teach it manners, and you have a halfling. They are as identical as they are opposites, because flip sides of a coin are still from the same coin. They hate each other not because of their differences, but because of their similarities; each race sees the other as a twisted perversion of themselves.
If you are thinking of the seelie/unseelie division of folklore, you are on the right track, but there is more to it than that. There is also the "dark mirror" aspect -- "I see in you everything I hate about myself, and it fills me with shame, and since it is easier to hate another than it is to hate myself, I will hate you and kill you for my failings."
This deep and abiding shame is why both races do not talk about their similarities (which anger them) or their origins (which would just invite questions). It is rather like having a family member who is a child molester -- better to privately burn in shame, and attempt to quietly excise that branch of the family tree, than to have it be known and invite shame upon all.*
Like a Switch
That said, it is still possible for halflings to go bad, or for goblins to go good. It is a rare event, but when a halfling succumbs to despondence, it experiences a kind of phase-shift and becomes a goblin. Likewise, a goblin afflicted with mania will "see the light" and become a halfling.
This event is rare because both races have a strong community, and when a potential change is expected rapid and effective responses are mustered. If the afflicted individuals are lucky, they are exposed to the counter-element and the change is prevented. If they are unlucky, or the community response is late in coming or is insufficient, that individual... disappears.
In halfling communities, they are said to have "gotten the wanderlust" and have gone off in search of adventure. In goblin warrens, they end up in the stewpot.
In the rare instances that an individual survives the transition -- either through isolation or escape -- they wander off in search of a new community, which will welcome them as though they are long-lost cousins.
Which they are, truthfully.
Despite being the same species, halflings and goblins are physically different on a scale that goes beyond mere cosmetics. When one of them changes into the other, they experience not just a change in their mindset, but also in their physiology.
A halfling is essentially a short human with slightly pointed ears and certain body parts (feet, head and hands) that are just a bit too large for their frame in the same way that the heads of children are out of scale, or puppies have huge paws. There is just something about their appearance that suggests cuteness and vulnerability in humanoid viewers, and this is often a source of mild irritation for a halfling who wishes to be taken seriously -- especially if they are older than the viewer.
If it helps, imagine what a leprechaun would look like if it were drawn in an anime style.
Goblins, on the other hand, are feral. While halflings stand up straight and are adapted to the light, goblins are hunched over and optimized for the darkness. Their jaws unhinge for eating objects larger than their mouths, and their teeth are wickedly sharp. Their eyes are mostly pupil, and their ears can rotate like a dog. They are hairless, and their skin hues are earth tones. They are skulking grotesques that inspire revulsion.
The physical difference between goblins and halflings is more explicit and physically divergent than those between Gollum and other hobbits, but the overall dynamic is similar. These changes are due to their vulnerability to positive and negative energy -- any spell or effect which channels radiant or necrotic energy that affects them is doubled in intensity as it alters their very forms. In other words, what is simple healing to most races affects them on a deeper, more fundamental level.
Changing between the two forms is not magical; it cannot be dispelled, nor can it be reversed except through exposure to the counter-element. It is a swift change, but not immediate nor drastic -- an observer not playing close attention could miss the signs until it was too late. Most of the changes are behavioral, with a shift in thought processes affecting body movement. Think "zombie infection" rather than "lycanthropic shapeshifting."
Language and Culture
Other than these differences, both races have an amazing ability to blend in with other cultures. They both speak Common, and whatever language is used by the races surrounding them. They adopt many of the cultures and mores of the people around them, with their boisterousness serving to make them seem "like us, but moreso" to those who might otherwise wish them harm.
This is due mainly to the fact that while the Elder Races appeared with hundreds or thousands of years of history for their cultures, halflings and goblins just appeared out of nothing. Without any real civilization of their own -- no history to support them, no traditions to guide them -- they just borrowed those of the races nearby and made them their own.
They are, in essence, the greatest social chameleons -- and culture thieves -- that Pellatarrum has ever seen.
It's the Little Things that Matter
Halfling and goblin society is remarkably similar -- they differ only in intent and degrees:
- Both are voracious omnivores; goblins are simply less picky in what they eat.
- Both reproduce rapidly; halflings just take care of their offspring with more care (the difference between "children" and "spawn" is critical.)
- Both are comfortable underground, but while goblins have warrens, halflings have burrows.
- Both like kites. Goblins just make theirs from the skin and bones of their victims, with entrail streamers.
- One is a community where members look out for one another; the other is a pack/tribe where Social Darwinism is the order of the day.
* Private Things are Private
This of course raises the question, "What happens when player characters discover this secret?"
It should first be mentioned that there is no real reason why the DM should feel a need to suppress this knowledge. The game world will not end if the secret origin of these two races is revealed. Indeed, it is entirely possible that it is already known by sages and scholars.
It's what the PCs do with this knowledge that is important. As mentioned, both halflings and goblins feel this is a deeply shameful secret -- so shameful that they are willing to commit mass murder in order to conceal it.
Are the PCs really so dim that they do not see the disaster inherent in the notion of blackmailing a people who fit in everywhere and are prevalent within the hospitality industry? Or in exposing the shame of a race of spies, sneak thieves and assassins?
If they are, then they deserve to disappear quietly in the night while they sleep at an inn, or never leave a quiet town in a deep valley. After all, how else do you think the halflings get the marvelous fertilizer they need to grow their delicious crops?