Halflings refer to themselves as the Erhavas, which roughly translates into "the folk". To them, family is everything. Lacking a homeland, they turn to each other for stability and security, both physical and emotional. Their society is organized into caravans, each consisting of several extended families. They travel in special wagons pulled by ponies. Each wagon is brightly colored (as is all halfling dress), and they are often covered in carvings, either of geometric patterns, plant life, or animals, according to the inhabitants. (plot point: the PCs encounter a caravan whose wagons are completely white, they would know then that something was not right) The interiors of the wagons are also lavishly decorated, with silk pillows, surfaces inlaid with semi-precious stones (or perhaps just glass, depending on the wealth of the owner).
Halflings are seen by others cheerful, welcoming folk, always ready with a drink and some food for those visiting a caravan. They do this as a form of self-defense, to make those whose lands they are passing through more at ease with their presence. Because they are so giving, it is seldom noticed, until after they are gone, that the halflings never let anyone see what is inside the wagons. In deed, while the halflings may spin tales and sing for hours, they never reveal much about themselves at all. This need for privacy has lead to a host of rumors about halflings, not many of them flattering.
(possible plot points: the PCs must stop a gang of misguided youths from attacking a caravan based on false rumor; or the PCs need to retrieve some item they believe is in a halfling wagon)
Each caravan is lead by a Chief Drover, who is elected by the heads of the comprising families. The Chief Drover leads until his (or her, the Erhavas are an egalitarian society) death, or until they lose the confidence of the caravan members. In either case, a special meeting of elders is held, and a new Chief Drover is chosen. Often, this choice has already been made, informally, through campfire gossip and talks over tea. It has been know, however, for a caravan to split if no agreement can be made.
Once a decade or so, multiple caravans will converge upon one location. This meeting (called a taramine) is an occasion of great celebration. The days are filled with sports (halflings are fond of bocce ball, lacrosse, and polo from dog-back), dances (including the bowl dance), and feasts. Nights are given over drinking, more dancing, and storytelling. This meeting is a chance for exchange, of goods, information, and affections. Almost all halfling courtships are begun at the taramine.
This meeting of caravans is not only an event of significance to the halflings, but it is also a destinations for non-halflings. Humans of one kingdom may linger around the campfires of caravans that frequent a rival land, gleaning intelligence on the state of their enemy, without the risk of actually espionage. Forbiden goods may be passed across borders, as well as fugitives. Thrill seekers may attend a taramine wishing to hear any new rumors of adventure. Often, human nobles will go in disguise to a taramine, just to experience a festival where they are treated as regular people (for what ever reason they would wish that).
(plot points: the PCs need to get into a hostile kingdom, and seek help from the halflings; an item of great power has been stolen by known halflings, and the PCs need to get to it before it is passed off to another, unknown caravan; an inportant noble has gone missing, and they were last known to be going to a taramine, did something happen there, or was it elsewhere (most likely on the road))
Halfling caravans follow the laws of whatever kingdom they may be passing through, but they also have their own code. The First Law of the Erhavas is: Do Not Betray the Caravan. If halflings cannot trust the members of their own caravan (that is, their family), then they are vulnerable. Betrayal can include, but is not limited to: stealing from or cheating caravan members, causing physical or emotional harm to members, impeding the progress of the caravan’s travel, alerting hostile factions to the caravan’s presence or movement. The definition is determined by the Chief Drover, and so varies from caravan to caravan. The Second Law of the Erhavas concerns conduct between halflings and other folk. It is, simply, Don’t Get Caught. Halflings will forgive almost any behavior towards outsiders, as long as it does not bring unwanted attention to the caravan.
Halflings are known throughout the kingdoms as excellent woodworkers and textile makers. In towns, settled halflings take up occupations such as wood carvers, tailors, weavers, or similar. Travelling halflings sell finished wooden objects (bowls, cups, statuary), clothing, or bolts of brightly colored cloth.
The other great industry of the halflings is entertainment. Halflings are born storytellers, natural singers, and extraordinary dancers. They practice their singing via way chants, songs sung to keep the pace as the caravan travels. When they arrive in a village, they often set up a stage (if one is not available in a tavern), and sing songs and tell stories for coin. The performances usually end with a performance of the halfling bowl dance, wherein a dancer begins with one bowl upon her head (they are almost always female), and more bowls are added as the music tempo increases. (Often, wagers are placed against the number of bowls reached before the dancer looses balance. It is a great source of revenue for the halflings.)
Halflings prefer to use diplomacy to avoid fighting, but when necessary, they are courageous fighters. They make great use of mounted archery, firing from the backs of riding dogs, rarely staying in one spot, denying the enemy a chance to fire back.
Halflings have a special fondness for dogs. They see a kinship between the loyalty of a dog pack and the loyalty within a caravan. It is not uncommon for a caravan to have as many dogs with it as it does halflings. An individual halfling my have a favorite canine (and the dogs may choose a favorite halfling), but the dogs belong to the caravan, if they can be said to belong to anyone, for they come and go as the please. (but again, if there were a total absence of dogs, it would be a clue that something is going wrong with the caravan)
Halfling religion, as with everything else, centers on family, specifically, ancestors. Halflings believe that if they pay proper respect and reverence to their ancestors, then the ancestors will watch over their descendants. Each caravan has at least one official patron ancestor, usually a particularly notable Chief Drover, waychanter, or someone who did something extraordinary in service of the caravan. Each family will then have its own ancestors that it will call upon in times of need. The belief among halfling priests is that any spell effect is in actuality the action of one or more of their deceased loved ones intervening on their behalf.
Additional Ideas (2)
Wagon propulsion: wagon axels and wheels could be under an "animate object" spell, turning with of their own power, or, they could be pulled by clockwork or otherwise inorganic ponies (perhaps wooden pony amatures, carved and articulated, then animated with magic)
Canine affinity: what if their love of dogs stems from the fact that a percentage of halflings are natural animagi, that is, they can assume the shape of a dog at will