The answer to the OP is quite simple, The majority can't see themselves as a dwarf as easily as they can with a human or elf or orcs. Here is why; Humans = You're basically playing yourself, you know your limitations and abilities easily so it's nearly impossible to fail at that. Not only that but as stated before a human can be turned into a 'Perfect human' (something I'll delve into later in this post). Elves represent purity, nature and magic and thus have more fans than dwarves because they hold more powers overall. Dwaves hardly EVER use magic and when they do it'll never be deemed as powerful as an elf's magic. Elves are also perfect with the bow and act like ninjas. People also see tall and slim as perfect sex wise as well so that helps. Orcs are rough, tough, mean and angry blood thirsty monsters of rage and hate, thus making them played more because they're 'perfect' in a different way, they are a outage of inner anger that people can release in the RP easily. They don't need to solve their problems by thinking or talking their way out, they just walk up and bash everyone's skulls in. They are also (while ugly in the face) strong and tall as humans, making them playable too and semi-'sexy' (when you put a bag over their face) in a sense as well. Dwarves hold none of those traits, they're shorter and their muscles give them a more 'fat' like appearance than anything. They're played rather dully due to the fact that they are usually deemed as Drunk smiths and fighters, yet all races you could play the same thing AND be more. A Dwarf can never be more human than a human, A Dwarf usually isn't as pure, magical or stealthy than the elves, A Dwarf is hardly ever as angry of bloodthirsty than the orcs. This makes the Dwarves bet the bottom of the barrel and nothing but comic relief. 

So to answer your question, they're not played as often because 1) all important roles are already filled by the other races, 2) they aren't sexy, hot or good looking AT ALL (by majority vote) and 3) They're dull to play and were made to be comic relief, not a serious threat to anyone. 

Now, how can this issue be fixed? Customize your Dwarves more, give them something that none of the other races will ever be able to compete with. Technology can do this. Make the Dwarves more than drunks, make them able to be technical engineers that can create things better than the other races EVEN WHEN DRUNK! (See the players swarm for the dwarves when they realize Dwarves can make grenades, guns and mini-mechs). Make the Dwarves more bloodthirsty than the Orcs, maybe unlike the Orcs the Dwarves are cannibal warriors that eat what they kill in honorable combat. Make the Dwarves able to be slim instead of fat muscle beasts? After all, Who says the short can't look hot and sexy as well? Make the Dwarves economic trading KINGS able to get gold faster and easier than elves or humans with only 1/1000th of the effort? Give the Dwarves their own form of powerful magic that only they can use?

Another problem with most RPs is that they are usually combat based. If you take off a bit more of the combat part and focused on other areas that require more skill than combat (per say Democratic, Trading, Creating, Surviving, ect..) It'd be easier to make the dwarves wanted to be played. 

Overall Dwarves are just undeveloped and all you have to do is add more too them to make players see that they ARE a worthy to play race after all and hold much more advantages than one person might thing. Possibilities are endless and it's only up to both the Players and the GMs on how limited those possibilities are.