I read this book as a child, and the Yellow Submarinesque illustration style stuck in my head. I've spent years trying to search online for clues to what the book was. All I could recall was it was set under ground and had short fat people and tall thin ones.@BellJarred was talking about childhood library books on Twitter yesterday & I mentioned my long term search for this book that skirted around in my memory.
It was @MoleWife who recognised my vague description and lo and behold, I am reunited with Fattypuffs & Thinifers. Thank you!