The formation of dwarf, diffuse, metal-poor galaxies, as a result of supernova driven winds, is reexamained in view of the accumulating data on dwarfs in the local group and in the Virgo cluster. The observed drop in both surface-brightness and metallicity with decreasing luminosity is not easily understood if the gaseous protogalaxies are self-gravitating (because they swell after gas-loss), but they are produced naturally inside dominant halos, with a mass-radius relation that indicates ‘cold’ dark matter. The theory predicts for the faint dwarfs an M/L that increases with decreasing luminosity up to 10–100, and a corresponding slow decrease in velocity dispersion down to 5–10 km/s.