Minor Spoilers for THUD! and JINGO follow:
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They have markings, on their forearms if I recall correctly, that are tattoed with Vurm blood. (Thud!)

Explosives as such have been invented. Leonard of Quirm abducts Nobby and Colon with the equivalent of a fireworks rocket/bazooka in Jingo. Nobby knows about them, and it seems pretty common knowledge.

I don't think the dwarfs use it though. I'm guessing blowing up the mountain that you live in might not be considered wise.