This pony actually does not look like a dwarf to me when I really look at him. The deformed legs make you think that he is at first, but he doesn't seem to have all of the normal characteristics of a dwarf. His head is now bulbous...it's actually probably the only normal thing about him. His spine appears to be slightly mishapen, but not to the degree that I'm used to.
A dwarf horse is a classification of deformed miniature horse or pony. Their legs are less than half of the length that they should be, which is the most prominent characteristic. They also often have mangled, deformed limbs (such as your pony's), tend to have rounded, bulbouse heads, underbites, curved spines, and in severe cases, very weak digestive systems and organs, or hindered nasal passages. Dwarf horses are the result of inbreeding and the race to breed smaller and smaller horses. Dwarfism can skip many generations at a time, and reappear in the offspring of a carrier, meaning that even if your pony's parents are fine, they may of still given him the active gene for dwarfism.
The most common dwarves are brachycephalic dwarves, who's middle third portion of the head is abnormally flat and low, and who has enlarged joints, a short neck, and extremely short limbs. These dwarves are considered less 'sever' than Achondroplasic dwarves, which causes a defect in cirtilage and bone formation, short limbs, and often internal problems. Achondroplasic dwarves rarely live normal, pain-free lives.
Here is a fairly good, accurate site on dwarfism in horses. Dwarf Horses
We actually own a achondroplasic dwarf, named Little Feather. He's thirteen, and has undergone two different surgeries to free up his nasal passage and to partially correct his feet.
You can find pictures of him here: Little Feather -- dwarf mini