Goblins were Dwarves once, or at least that is what Human scholars say. According to this narrative, the Dwarves -- who are known for worshiping little else than gold -- uncovered a demon whilst dinging one of their halls. This demon demanded worship, as many such demons do. The Dwarves who refused to submit their wills to a chaotic entity were devoured, and those that accepted the demon's price became Goblins.
Goblins vary wildly in appearance due to their chaotic natures but they are universally squat and hideous. Some Goblins can grow to be just under the average height of a man. These creatures Humans call Hobgoblins and Goblin Kings are almost always taken from among their number. Besides size, there is little that distinguishes Hobgoblins from their smaller cousins, and all Goblins are invariably cruel and malicious.
Goblins are known to love precious metals and beautiful things. Their small statue prevents them from having the muscle needed to establish a large hoard, but they do pick up golden trinkets whenever they can. Treasure seekers who decide to plunder known Goblin lairs are often disappointed to find that Goblins tend to deface these beautiful objects. Statues of saints are often found with makeshift horns attached, or simply decapitated. Gold coins with old imperial rulers on them are slashed to make the face and name unrecognizable. It seems that only gems or other items of more or less natural beauty are free from the Goblins' wrath.
While most scholars will say that Goblins only live underground, every peasant whose ever had sheep go missing or a cow mysteriously slaughtered will tell you that they at least range forth at night to carry out their wicked schemes. Under the cover of darkness, when men shun the woods and the fields, they strike. They are fond of the taste of livestock, but prefer children if they can get them. According to the wet nurses of the World, they are especially fond of naughty children, whose flesh they savor above all else. The veracity of this is obviously suspect.
Some have wrongly asserted that Bugbears and Orcs are subsets of the Goblin race. While it is true that Goblins, Bugbears, and Orcs often come together in large bands dedicated to pure chaos and that they cohabitate in the more haunted places of the World, they are in fact three separate types of creature. More astute scholars will note that such hordes and places often contain undead in varying numbers. While there are a few who would assert that all of these malevolent beings are lost souls escaped from Hell, most scholars point to the Goblins' Dwarven background as evidence against this idea.