jmartkdr2
Hero
I assume for my own settings somewhere between 1/3 and 1/2 of smallfolk* are nomads of some sort - when you can't rely on force to stay where you are, you learn to move when you need to. River traders, desert caravans, living wholly on ships at sea, dog-sled nomads: wherever you go, there are smallfolk traveling about - visiting, trading, and moving on before they wear out their welcome.I did like one of 4e's takes on halflings: itinerant boaters, who trade up and down rivers.
(Ambushing said caravans as they go through the wilds is usually a bad idea, though.)
The others either learn to hide well (the classic hidden gnomish village) or live in separated city neighborhoods where they can just do a little business with outsiders and otherwise not get caught up in things.
* For ecological reasons, I combine halflings and gnomes into one species and call the split rules 'representative of the diversity within the race'. It just doesn't make sense that they would be two different kinds of creatures, even if it does make sense that one creature would have dozens of different cultures.