Which term is used to describe smaller or dimmer than average stars?

A dwarf star is a star of relatively small size and low luminosity. Most main sequence stars are dwarf stars. The meaning of the word "dwarf" was later extended to some star-sized objects that are not stars, and compact stellar remnants which are no longer stars.

The term was originally coined in 1906 when the Danish astronomer Ejnar Hertzsprung noticed that the reddest stars – classified as K and M in the Harvard scheme (a one-dimensional classification scheme for stars) – could be divided into two distinct groups. They are either much brighter than the Sun, or much fainter. To distinguish these groups, he called them "giant" and "dwarf" stars, the dwarf stars being fainter and the giants being brighter than the Sun.