Villagers are generic inhabitants of Pollnivneach. During The Feud quest, they are used to teach the player different methods of thieving.
Initially, villagers can be pickpocketed like other NPCs. After being pickpocketed once, any further attempts will fail, and the player must pay the street urchin to distract them before being able to pickpocket them again. After that method, the player must use a blackjack in order to pickpocket villagers.
After the quest, they can only be pickpocketed using the blackjack method. A successful knockout on a villager grants 8 Thieving experience. However, you will gain no experience from pickpocketing the Villager (you still receive the gold).