Foolish use of wizards’ magic resulted in a world-wide catastrophe, a climate-ruining event that blocked out the sun and caused the extinctions of most large creatures: anything as big as a human or as giant as a typical dragon simply lacked the food necessary to survive. In this new environment halflings, humans with a mutation for reduced stature and resource needs, held out and inherited the world.
Not all dragons went extinct. While on other worlds humans domesticated dogs, on this one halflings domesticated dragons, who are small, do not breathe fire, and are capable of being made into pets. They are in many ways flying reptilian dogs, at least to the halflings.
Many halflings study magic if they can. While only about 10% of people are literate, about half of those who are make an attempt at studying spell-casting. Not all succeed, but those who do can make use of relics of magic left behind from the world before the extinctions.
Those who can’t figure out magic instead focus on alchemy, which is easier to grasp and less metaphysical. The scholarly improvements of alchemy and magic have allowed the agrarian halflings to form thriving city-states.
(I do not own the images in the above collage, and all copyrights belong to their respective owners.)
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