Good afternoon Ghosthunter
I am only responding now, as I have not been at my best these last couple days but wanted to take a few minutes to write to you about your post regarding the third eye.
First, I need to ask. Aside from seeing your grandmother laying on her bed and someone holding your hand, is there anything else that you have experienced?
It is very common for small children to be able to see into the spirit realm. Their minds and hearts have not succumbed to the skepticism of adult society (primarily), thus allowing them to be more in tune.
Second, I'm curious about this dwarf you saw and the age you were when you saw this. The Eastern civilization refers to little people as dwarves. In essence, an older term for this is "midget". These people are merely born with genetic flaws that do not allow them to grow past a certain height. Characters such as the ones depicted in Harry Potter and also in the Lord of the Rings, are not real. They are characters transposed into literature and into movies that resemble certain aspects of truth, evil, etc.; beings that have been a part of folklore for centuries in order to tell stories and to teach morals.
The third eye, also known as clairvoyance which is a French term meaning "clear seeing", In Buddhism and Hinduism, the third eye is a point or symbol of enlightenment. For some, it enables one to be able to see another person's aura or chakras, as well as have out of body experiences and precognition (seeing the future).
Each person is born with an ability to experience things on a different level. Dependent upon the upbringing, religious aspects, and believe in such things; as a child grows from infancy to an adult, it is something that either fades in time or continues to present itself in different fashions. For many, they either choose to ignore it or simply forget how to "listen" and "see".
I am interested in knowing more about your abilities, the experiences you have had and what has brought you to the conclusion that you are a being that possesses gifts to be able to communicate in some fashion with another plane.
Have a good Friday.