Goblins are perhaps the most widely-spread race. Formerly a powerful race, centered on their now-sunken continent in the Sea of Ghosts, they were masters of the world. A talent for necromancy doomed their race though, and in a great cataclysm their continent was sunk, leaving only scattered islands.
The goblins adapted. On the mountains remaining above the waves dedicated goblins made their new home, while refugees settled in the cities of other races, or battle them for territory. The goblins who still brave the Sea of Ghosts split their time between hunting the undead created during their fall and pirating the ships of other races crossing above their former home, or maybe even getting a bit of legitimate trade in.
Goblins have created a gunpowder-like substance called boom jelly. Their warships mount actual cannon, a feat no other race has equaled on land or sea. Boom jelly is also used in the matchlock pistols carried by pirate raiders. Boom jelly requires an ingredient found only on their home islands.
The gunpowder sometimes used by the Lawless Human Cities is considered a piss-poor substitute.
The old Goblin Empire is also the source of the common language now used for trade.
Fall of the Goblins
Roughly 800 years ago, the Goblins were a major superpower. Based on a small continent in what is now the Sea of Ghosts, they possessed advanced magical skills, especially in the powerful field of necromancy.
(COPYPASTA from thread follows. Too good to rewrite:)
"Long ago in time forgot, the ancient necromancer lords searched to hard and far for the knowledge in the dark, and woke the nameless horrors that sleep beyond the world. Those beings came and the gods had war with them, a fight for the survival of the world and all its past, present and future, for they outer gods would devour time itself. Yet those ancient necromancers were the ones who finally drove them back: for they took the body of a fallen god, his head and lower body crushed to naught and his hands sliced clean away, and woke his flesh again with the very power of their enemies. Thus risen was the Phantom Shadow Beast, Bongo Bongo, and deep below the earth he beat the rhythm that tied those ineffable horrors to time, forcing them to flee or else to age and die.
All the mortal world forgets him now, save only in the dustiest of ancient necrotexts, and in the darkest rumors of the dwarves: for when the people of the earth venture deep, beyond the clang of anvils and the echo of words in their halls, to the deepest, darkest silence of the uttermost depths, they may hear the distant rhythm that echoes up from beneath the world. The beat of Bongo Bongo.
He is the One that leads the Dance of Ruin. This is the giant necromantic effect that spawns the necrostorms whenever someone else casts necromancy. Incidentally, it also keeps the Illith and Goblin Lich Kings at the bottom of the ocean. If he ever stops, the world will know silence. For a time."
The creation of an undead god saved the world, but doomed the Goblins. Either the strain of casting the spell, a final retributive strike from the Outer Gods, or just the world itself convulsing in horror at what had been done, the Goblin homeland was destroyed in a cataclysm. Sinking beneath the waves, subsidence and tidal waves expanded small saltwater marshes into the vast swamps inhabited by the Toltecatl and the Doobies.
The Goblin lich-kings were trapped by their own creation, forced to haunt the sunken tomb-cities of what was once a great race. There they do battle with the secretive, aquatic race known as the Illith. The Illith kingdoms were devastated more than any surface nation by the fall of the Goblins and they have used looted magi-tech and their own bio-engineering to create a war machine that they are now using to raid coastal villages for their own arcane purposes.
Goblins can be roughly divided into three types; ghetto, wild and remnant.
Remnant goblins are those who remain in the few remaining outposts of their civilization (notably the Sundered Isles and the Orzfandrecht freeport in Everoc). They are in fact a primarily naval group, however. The few cities are largely uninhabited.
In an effort to survive and keep their refugee peoples unified, the remnant goblins maintain a worldwide merchant fleet, touching on every continent and uniting the goblin communities in a web of trade and information.
Other races have complained that goblin merchants are heavily armed and constitute a de facto navy. The goblins reply that their fleets are armed for the purposes of self-defense and to deal with the necro-ships that haunt the Sea of Ghosts. Any accusations of piracy are ludicrous and unworthy of reply. However if you are having a problem with pirates, signing a lucrative trade deal with the Goblin Nation should clear that problem right up. Purely as a byproduct of armed goblin merchants in your trade routes.
Ghetto goblins are descended from refugees who found homes in the cities of other continents after the great disaster. Tolerated if never welcomed, they do their best to make themselves useful. They tend to live in isolated communities with other goblins, and speak their own language. They are often considered to be an unpleasant criminal subculture by the local authorities, but they are most often tolerated. Even for those leaders who would have no moral problem with killing the local goblin population realize that it would be hugely expensive, and in the long term would only serve to anger the Remnant goblins.
The Wild Goblins are goblins who have reverted to barbarism after the fall of the Goblin Empire. They are most prominent in Central Lindwurm and Southern Everoc. They tend to band together in small warbands or tribes, and raid whatever they can, though many also take mercenary work.