Abstract: We investigate stellar metallicity distribution functions (MDFs), including Fe and α-element abundances, in dwarf galaxies from the Feedback in Realistic Environments (FIRE) project. We examine both isolated dwarf galaxies and those that are satellites of a Milky Way-mass galaxy. In particular, we study the effects of including a sub-grid turbulent model for the diffusion of metals in gas. Simulations that include diffusion have narrower MDFs and abundance ratio distributions, because diffusion drives individual gas and star particles toward the average metallicity. This effect provides significantly better agreement with observed abundance distributions of dwarf galaxies in the Local Group, including the small intrinsic scatter in [α/Fe] vs. [Fe/H] (less than 0.1 dex). This small intrinsic scatter arises in our simulations because the interstellar medium (ISM) in dwarf galaxies is well-mixed at nearly all cosmic times, such that stars that form at a given time have similar abundances to within 0.1 dex. Thus, most of the scatter in abundances at z = 0 arises from redshift evolution and not from instantaneous scatter in the ISM. We find similar MDF widths and intrinsic scatter for satellite and isolated dwarf galaxies, which suggests that environmental effects play a minor role compared with internal chemical evolution in our simulations. Overall, with the inclusion of metal diffusion, our simulations reproduce abundance distribution widths of observed low-mass galaxies, enabling detailed studies of chemical evolution in galaxy formation.