It might be that their low birthrate were, at least to a degree, psychological in nature.
It is not minorly, it is majorly psychological. The sheer weight of the accumulated Grudges, continual losses, ever shrinking, etc. The prevailing opinion of the majority of dawi, prior to Karak Ungor, was the same as it was in canon 2522 era i.e. 'We are all going to die, there is nothing that will change that, we will just stubbornly be ground down until there is nothing remaining'. The issue is that, to the average dwarf, such a fate is grim but acceptable, because there quite simply is no foreseeable alternative. It is, in the end, an elaborate and lengthy racial suicide. The ancient glories will never be recaptured, the future holds only eventual death, and it is better to die trying to wipe out the impossibly long list of Grudges than anything else. I would point to the Grudge Striking Ceremony in the epilogue of Karak Ungor as an example of what I'm talking about. Grudges are a hell of a thing. For all that dwarfs are generally meant to be more 'grounded', literally resistant to magic and whatever, plenty about them is supernatural. The Runesmithing/Runepriests, the sheer breadth of their mechanical abilities when they are willing to do it, the sheer precision and perfection of their craftwork, etc. Literal inhuman concentration and strength/skill/durability/etc. The White Dwarf was so offended by a certain oath-breaking that he literally stubborned himself into becoming a racial and deific avatar. Dwarfs can stubborn themselves past where starvation and dehydration
should have killed them. Because Grudges, and Oaths, are so engraved into their metaphysical makeup. The sheer level of Grudges that have accumulated, ever more written into the Dammaz Kron than struck out, is incredibly deleterious to their race, because it reached a point a while ago of 'there is no way we can ever actually strike all of these out' coupling with 'we have to write in a new grudge always' and a general level of cultural inertia tipping into a remarkably stubborn and slow yet supposedly inevitable avalanche right towards extinction.
One of the quotes I've found regarding the dwarfs dates back to the War of Vengeance, even, from the Master of Dragons book:
"They fight well, the Elgi. They fight better than any warriors I have ever seen. But do they suffer well? No one suffers like the Dawi. We will make this the battleground - they will be broken on the anvil of our suffering."
There's another quote out there, one I frustratingly cannot find anymore, and it is of the perspective either of greenskins or skaven, one of the two. I'm paraphrasing from memory here, of course. They remark that the Dwarfs themselves are not weak, they simply assume they are. That they are doomed. That they are not quite fallen, but certainly fall
ing. But that the great secret is, in fact, that the dwarfs are still strong. And mighty. And if they ever, ever remembered just how strong they could be, then there would be severe issues for their enemies. You can contrast this to one part of 8E which fits, in that after the insult of Tyrion to the dwarfs when the Asur and Dawi both fought against Mannfred to rescue the kidnapped daughter of the Everqueen, the longbeards clamored,
demanded that Thorgrim write in a big fat new Grudge into the Dammaz Kron. Because that was how it was going to be. This momentary alliance and improvement in relations better than in centuries which has been slightly scuffed by a distressed and frustrated elf means that we should write a new Grudge and go to war and vengeance and surely lose many dawi because That's How We Are Going To Do Until We End. With, of course, the implied End being inevitable. The Age of Reclamation got a few holds back, but Karak Varn is still a pit, and K8P is lost, with only 500 dawi sitting in the citadel as the vast majority is held by greenskins and skaven. Norn will bloody itself senseless against Athel Loren. And we'll grit our teeth and bear it until we're gone. Right?
Thorgrim says no. This is
shocking behavior, and while if it was just a Beardling it'd be one thing, it's the High King himself.
So, circling around to the original bit, as long as The End was inevitable, then what is the point of bringing new lives into the world? Sure, duty between nobles might keep things going, you're expected to birth at least a new heir and a spare when you marry. That's How Things Are Done. Perhaps love between two dwarfs might ensure a few more sprogs here and there. But inevitably, there will eventually be no more beardlings, and only bitter and grim longbeards who will spit in the eye of their foes as they, inevitably, fall and the last Holds are lost to the darkness. There is no hope, no point.
Or. You know. There
was no hope. No flashpoint of revitalization, of realization that no, maybe things
can change. Maybe, just maybe, with enough stubbornness, certain things are possible.
Including change.
Including, quite possibly, grabbing hold of an avalanche and dragging it backwards up the mountain.