I have read a fair amount of deprecation of the halfling here and there in the D&D world (some games even pretend that halflings do not exist!) and it is time to put the myths to rest. The image of the halfling as soft and bumbling is a poisonous lie spread by the nefarious J.R.R. Tolkien and it has been taken up in the fantasy roleplaying community. The truth of halflings is much darker, mysterious, and interesting.
Halflings, like their taller and weaker cousins the humans, are highly adaptable and live in a wide variety of terrains. Halflings, being slightly smaller, can survive in more extreme climes than humans can. Halflings can be found in deep jungles (the ferocious pygmy warriors and lizard-riders of legend), deep mountain retreats (the infamous spelunker assassins often hired by dwarves to assail their enemies), and in wild-wood fastnesses (wolfriders and tree-crawlers feared by orc and elf alike). Sometimes, they can even be found in towns or among adventurers working as heavily armored sellswords or living on the margins of human society.
Most halflings do not dwell in holes or live lives of quiet gluttony.
Halflings are in league with all manner of fae creatures and ally with them in times of need. While they rarely traffic in "arcane" or "divine" human magic, halflings will often be encountered armed with mysterious faerie witchcraft and charms.