Dunlendings were the ferocious, stunted and vicious men that lived in Dunland, close to Rohan. Also called the Wild Men of Dunland, they have long been enemies of the Rohirrim, becuase they are jealous that the rich lands of the old Númenórean province of Calenardhon were granted by the Gondorians to the Rohirrim instead of them.
The ancestors of the Dunlendings are the House of Haleth or the Haladin, the second of the Three Houses of the Edain. They were the descendants of Haldad, but the house was named after Haldad's daughter Haleth, who led her people from East Beleriand to Brethil. They were a reclusive folk, dark-haired but smaller in stature than the Bëorians or the Marachians. They kept separate from the other Men. Their language was different from the ones that used by the other Edain.
After the fall of Beleriand, the survivors went to Númenor but those who didn't cross the Ered Luin settled upon either side of the Gwathló or in the Ered Nimrais. In the First Age, the Drúedain lived among them and shared close relationship, more than with any other race of men.
In ancient times the peoples who were the ancestors of the Dunlendings ranged over much of what later became Eraidor and Gondor, but they were increasingly driven back by the Númenórean. Offshoots of these peoples survived in isolated places like the hilly country of Dunland or in the White Mountains: thus the Dead Men of Dunharrow are akin to the ancient Dunlendings. Some of these people were absorbed into the population of Gondor, and some stayed in the White Mountains. The Dunlendings themselves are a branch of the folk of the White Mountains that moved north to Dunland. Interestingly, the Bree-landers are themselves actually an offshoot of the Dunlendings, who moved even further north until they reached what became the Bree-land, and were absorbed into Arnor. There are few records of the Dunlending language, due to their lack of a written history and poor oral tradition.
The Dunlendings were always angered that the rich lands of Rohan were not granted to them, and constantly harassed the Rohirrim. The worst of these incidents was an all-out invasion by the Dunlending chief Wulf in Third Age 2758 which nearly overwhelmed Rohan during a particularly harsh winter, though the people of Rohan survived the crisis due to the leadership of King Helm the Hammerhand, and eventually the Dunlendings were driven out.
The Dunlendings were employed by the wizard Saruman to attack and raid the cities and settlements of Rohan. Since Gríma Wormtongue had corrupted the mind of King Theoden, the Rohirrim were absent for the most part, and the farm boys and old men who picked up rusty swords proved to be little contest to the ferocious Dunlendings.
Wild Men were also present at the Battle of the Hornburg (Battle of Helm's Deep), as well as an odd breed of Half-orcs, derived from Orcs and the Men of Dunland. They fought viciously against their old enemy, but when Gandalf stormed down the hill with a thousand Rohirrim at his back and his staff shining piercing light into the eyes of the Dunlendings, they dropped their weapons and surrendured. This proved to be a wise decision, as the Orcs who fled were killed by a massive forest of Huorns that blocked the entrance to the valley.
After Saruman's downfall, the Dunlendings retreated back into their homeland and did not trouble the people of Rohan. When the wizard Saruman attempted to take over the Shire, there were a number of Dunlendings with him. However, they were slain or driven away by Hobbits, Saruman died at the hands of his own servant, Wormtongue, Sauron, the basis of all evil, had fallen, and King Elessar took the throne of Gondor, the Dunlendings agreed never to trouble the free peoples of Middle-earth again, and their old and evil power was finally broken.
Behind the scenes
It is possible that the rivalry between the primitive Dunlendings and the blonde-haired, pseudo-Anglo-Saxon Rohirrim who migrated into the lands neighboring them was meant by Tolkien to be analagous to the real life conflicts that arose between the Anglo-Saxons in England and neighboring Celtic peoples.