The Drunken dwarf is a random event who occasionally appears and talks to players. If the player responds, the dwarf will give them a kebab and a beer. Prior to the random event update, he would throw rocks and damage the player if the player didn't respond.
The drunken dwarf is seen in final cutscene of the Forgettable Tale of a Drunken Dwarf quest. After the quest, if you see the dwarf and talk to him, he will speak of your 'Kebab stories' from the end of the quest and give you your beer and kebab as normal.