So what're halflings even good for? What kind of character concepts can they do better than other races...

Halfling are good at being fantasy gypsies, since they're already less than human.

I've yet to see a version of the gnome race done well in an RPG.

Check out Eberron. But even there they'd work better if you rolled them into gnomes.

>So what're halflings even good for?
You can't spell "halfling" without a "fling".

Dwarves are fighting and crafting shorties
Gnomes are magical and inventing shorties
Halflings are thieving and farming shorties

They have their niche

I'd love to have a fling with one

They are Bilbo

neither halflings nor gnomes should be in your setting at all. they are absolutely redundant.

but i play a magical thieving farmer dwarf

hill dwarf adopted by gnomes I see

In our campaign we just do
Gnome > Small Elf
Halfling > Small Human