FFH is Fall From Heaven 2, a mod for Civilization 4.
And there are dwarves and the like in Elemental. Just read the civilization descriptions. It even says "In another world, these people might be called dwarves." So while they aren't called Dwarves as such in elemental, for all intents and purposes, they are dwarves. Though I guess it might just be a placeholder description that's ironic, who knows. 
But anyway, I agree that it sure would be nice if terrain suited an empire. Perhaps not on a racial scale, but it would be nice that a certain terrain characterized a certain empire. "That swamp kingdom in the East." That'd cause them to have more personality. But since we don't truly know how the game works, it might be just that. The channeler would turn his lands to swamps with magic, and his nation would have people that have the Swamp Survival ability.