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Absolutely brilliant writing and art. You need to know nothing about Dwarf Fortress to read this - in fact, it may even work better if you do not. It's not a long read, and very worth it.
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They use dwarf fortress, as far as I know, not anything else. It's even called "A Dwarf Fortress Tale", not "A Gnomoria Tale". The about page says they use Stonesense renderer with custom sprites. I see no reason to doubt them.