Every dwarf is born with a unique personality that includes likes and dislikes. A dwarf's personality also changes with time; he or she may develop new preferences for food and drink and develop new character traits.
 Possible Objects of Affection or Revulsion
Each dwarf prefers particular materials, objects, animals, and foods. These types may or may not be generally thought of as preferable, valuable or even useful. A given dwarf may display many, a few, or (theoretically) even none of these preferences.
Preferences will include:
Preferences may also include:
- a specific type of wood
- a type of leather
- a type of glass
- a type of decoration material: a specific type of bone, horn, ivory, etc.
- a type of cloth
- a color
- a design/motif
- a weapon (inc. picks and bolts)
- a specific piece of armor
- a specific piece of clothing
- a type of finished goods or craft
- a type of furniture (inc. anvils)
- trap or siege weapon components
- one or more domestic animals, creatures or vermin (domestic animals seem to dominate)
- a type of crop (or, rarely, a type of tree)
- one or more favourite foods (new preferences can develop during game; presumably only for food that is actually eaten and probably only if it's not part of a prepared mealVerify)
- one or more favourite drinks (new preferences can develop during game; presumably only for booze that is actually drunkVerify)
- detesting a type of vermin
This information can be brought up either by typing from the unit list, or by showing a dwarf and then typing for Prefs, to view profile, and to view thoughts and preferences.
- Logem Datanamid likes Hematite, Fine pewter, Topaz, crystal glass, giant mole leather, beds, animal traps and horses for their strength. When possible, she prefers to consume turtle and Quarry bush Leaves. She absolutely detests lizards.
- She is quick to anger. She feels strong urges and seeks short-term rewards. She is somewhat reserved. She finds rules confining. She is self-disciplined. She takes time when making decisions. She needs alcohol to get through the working day. She likes working outdoors and grumbles only mildly at inclement weather.
Note that it is guaranteed that each of your initial seven dwarfs "likes working outdoors" and "grumbles only mildly at inclement weather". Immigrants most likely will not have these preferences.
All dwarfs "need alcohol to get through the working day" - that's part of being a dwarf.
 Effect on Skill Use (Crafting)
A dwarf with a preference for a material or an object will tend to produce higher-quality results for a given skill when working with that raw material or making that object. This is especially important in cases where you're short of raw materials to train on, as even a dabbling dwarf with the right preferences can occasionally produce quality objects. The dwarf above is not only an ideal candidate to become a glassmaker, she has real potential as a carpenter or even trapper as well.
Note that the material preferences can affect more than one stage in the production chain. If you're fortunate enough to have a dwarf who likes pig tail cloth, or giant cave spider silk, it will improve both their weaving and clothesmaking with those materials. It is unclear exactly how double preferences (steel and axes, obsidian and shortswords, or clear glass and windows, for instance) work, but they do seem to have a cumulative effect when producing those items from that material.
 Effect on Thoughts and Behavior
Dwarves who prefer particular drinks or foods will seek them out instead of choosing whatever's closest or newest, and will get a more intense happiness boost from a given quality of food or drink. Dwarves without a preference for a drink will go for the newest brewed. The dwarf above will be especially grateful if you find some turtles or include quarry bush leaves in your prepared meals. The deciding factor is not the name of the meal but whether one or more of its ingredients is a favored one.
Dwarves will also try to acquire items they like; adopting pets, purchasing items from a shop, and in the case of nobles, demanding furniture in their rooms or mandating construction of items in their favourite metal/stone.
 Effect on Artifacts and Demands
A dwarf's preferences have a strong impact on their artifact construction during a strange mood. If it is possible to create an item from the moody dwarf's preferences with the chosen material and workshop, he usually (but not always) will. Even in some cases where it's not possible to create an item from a material, the dwarf will go ahead and do it anyway! This can result in things like magnetite beds (normally only wood can be used to make beds) or billon plate mail (normally billon is not suitable for weapons or armor).
In a similar vein, nobles will usually only demand or prohibit trade of items from their preferences list, occasionally combining them into difficult to fulfill requests (e.g. blue shark bone piccolo). Any noble that likes a material you cannot create (for example, one who likes green glass items on a map without sand) should probably be dealt with at the earliest opportunity.
 Civilian and Military Positions
The preferences screen also contains a short section detailing any positions a dwarf holds, his squad of dwarves and enemies of this particular dwarf. While an entire fortress may be at war with another civilization, specific dwarves only become enemies after entering into direct combat with opponents of these civilizations.
 Continuing Study
Dwarven personality is a newer addition to Dwarf Fortress and still a work in progress. Also "under construction" is our knowledge of what certain traits mean and how they affect gameplay. We do know -- because Toady One has said so -- that there are at least a dozen or so places in the game that use personality to determine dwarven actions, so they're worth keeping in mind. The above dwarf is probably not the best choice for an expedition leader, as she is neither particularly sociable nor good at appeasing, intimidating, or comforting dwarves who come to her with troubles.