The Robots feed the Engineers turn one, boosting hitpoints/happiness and thus survivability in turn to repair the Robots, and also rapidly leveling themselves to Fireworks. 3 Robots plus 3 Engineers makes a cheap and deadly stack available relatively fast. Halfling in turn solves Dread's problem with healing through the Robot/Halfling Engineer interaction.

You get perfectly happy cities and armies roaming the underground or tundra without needing Elemental terraforming spells. Machines lack Halfling allergy to melee, and Suppress Nature completely negates their hatred of most climates.

Halfling and Dread cover for each other's weaknesses very well. I do really like Expander for Dread though, as fast Builders are very helpful on top of all the little economy bonuses. Cannon and Flametanks already do full damage at range, and the former already penetrates obstacles. Only muskets really benefit, and minimally compared to 3 shot multichannel units. Dread has an effectively infinite mana sink for the early and midgames in manacells, so getting a summon is purely up to taste.

Age of wonders 3 best class race combo