I watched this movie on French TV about 30 years ago. It was in French, but obviously dubbed from English.
There were two races (in the sense of Tolkien), Big people (us) and smaller people whose collective name I forgot. I am almost sure the name was not "dwarves", but something more original. But there were no special effects, these small people were played by actors affected with dwarfism.
The story was about a newborn baby who was heir of some country, and the cruel queen wanted of course to have him killed. I am not sure whether the queen herself had magical powers or not, but some people on her side certainly did.
The baby was eventually saved by an improbable alliance of priestesses, "big" fighters, at least one of which was an outlaw who joined the alliance more by necessity than good will, quite a few "dwarves" and a wizard. The latter reminded me of Gandalf from my memory of reading The Hobbit and LOTR, but that was before the movies were made for these works.