Since reionization prevents star formation in most halos below 3 x 10^9 solar masses, dwarf galaxies only populate a fraction of existing dark matter halos. We use hydrodynamic cosmological simulations of the Local Group to study the discriminating factors for galaxy formation in the early Universe and connect them to the present-day properties of galaxies and halos. A combination of selection effects related to reionization, and the subsequent evolution of halos in different environments, introduces strong biases between the population of halos that host dwarf galaxies, and the total halo population. Halos that host galaxies formed earlier and are more concentrated. In addition, halos more affected by tidal stripping are more likely to host a galaxy for a given mass or maximum circular velocity, vmax, today. Consequently, satellite halos are populated more frequently than field halos, and satellite halos of 10^8 - 10^9 solar masses or vmax of 12 - 20 km/s, similar to the Local Group dwarf spheroidals, have experienced a greater than average reduction in both mass and vmax after infall. They are on closer, more radial orbits with higher infall velocities and earlier infall times. Together, these effects make dwarf galaxies highly biased tracers of the underlying dark matter distribution.
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