@Adegan

The goblins were a primitive (possibly even non-sentient) race when the Trolls utilised them as brute force labour. The Goblin/Hobgoblin pairing probably made for excellent teamwork in certain areas, with the Goblins doing the fiddly work and Hobgoblins the more physical labour.

One of the main uses the Trolls made of the was the mining of a rare mineral Kajamite. Whilst it is unclear what the Trolls used it for, the Kajamite invoked a steady transformation in the Goblin psyche, granting them enormous intellects. Their new intelligence combined with their natural aptitude for chemistry eventually lead to the removal of their Troll overseers and the setting up of a massive industrial city at the site of the original mine - Kezan.

Unfortunately, the intellect granted by the Kajamite was temporary, and when the mine was exhausted it faded, though the Goblins maintained an above average intellect and their independence. The city of Undermine is (was) one of the most technologically advanced places on Azeroth. Unfortunately, the Goblins no longer understand exactly how most of it originally worked.

The last known sources of Kajamite were a single poor mine operated by the Bilgewater Cartel (who sold Kaja-Cola which had an almost non-existant Int boost effect), and another mine on the Lost Isles operated by a group of monkeys who had also begun to be susceptable to the Kajamite effect. Both of those sites have now been lost.

That was what I remembered from the original Goblin announcement page on the WoW website, and the Goblin starter quests.

I'd guess that Goblins were originally one of a selection of pre-sentient groups (Gnolls, Quilboar, Tauren (possibly), Furbolg, Tuskaar, Wolvar, Murlocs, etc) who were either around pre-Titans, or were part of the Titan's seeding of the world. The sentience came afterwards.