A Dwarven Smithy is a small structure that spawns in the Iron Hills. It is the only place where a Dwarven Smith can spawn, thus making it a good place to look for if you want to trade, and is a safe-ish place to hide from orcs during the night.
The Dwarven Smithy is found in the Iron Hills, but a structure very similar to it, the Blue Mountains Smithy is found in Ered Luin. It is a semi-rare structure, and is best found in flat areas of the Iron Hills. The Dwarven Smithy is also found in Erebor.
The only inhabitant of this build is the Dwarven Smith. He can trade anything from armour, to building blocks, to ores, and a few other items. You can also sell him things, turning your spare food or metal into coins.
As you walk into the the Smithy, immediately in front of you will be an anvil. Behind the anvil, there is a Dwarven Forge set in a "forge". To your left and right there will be, in in order of distance, an Unsmeltery, an anvil, a Dwarven Crafting Table, a loot chest, and a regular crafting table.
|The Dwarves of Durin's Folk|
Dwarf (Axe Thrower, Banner Bearer, Warrior)