Dwarves are popular because of Dwarf Fortress, which was popular enough to create a wave of followers. These followers are basically Dwarf Fortress fan games that don’t even try to hide it by using some other fantasy race than dwarves. If it had been called Troll Fortress or Orc Fortress or Goblin fortress, we would now be seeing waves of troll or orc or goblin games. You wouldn’t even need to change the mechanics, because colonizing and mining are things that trolls and orcs and goblins often do in standard fantasy settings.
Also, Tolkien’s elves were very much city dwellers during the First and Second Ages. The Hobbit and the Lord of the Rings trilogy take place near the end of the Third Age when most of the elves had already left for the Blessed Realm, leaving just a few token settlements on Middle-Earth.