der Wicht
goblin
A small, often goblin-like mythical creature or dwarf, sometimes described as malicious or mischievous.
In den alten Märchen treiben Wichte im Wald ihr Unwesen.
In the old fairy tales, goblins cause mischief in the forest.

goblin / wretch
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goblin
A small, often goblin-like mythical creature or dwarf, sometimes described as malicious or mischievous.
In den alten Märchen treiben Wichte im Wald ihr Unwesen.
In the old fairy tales, goblins cause mischief in the forest.

You can easily recognize the meaning from context. If the text is about fairy tales, legends, or mythical creatures, it refers to the mythical creature. If the word refers to a real person in an argument or a negative description, it is an insult.
Im Märchen hilft ein kleiner Wicht dem Prinzen.
In the fairy tale, a little goblin helps the prince.
When 'Wicht' (wretch) is used for a person, it is a strong insult. It expresses that you consider the person small, insignificant, and contemptible.
Er nannte seinen Konkurrenten einen arroganten Wicht.
He called his competitor an arrogant wretch.
As an insult, 'Wicht' (wretch) is often combined with adjectives like 'klein' (small), 'elend' (wretched), or 'arm' (poor/pitiful) to intensify the derogatory meaning.
Was will dieser kleine Wicht schon ausrichten?
What could this little wretch possibly achieve?
worm
'der Wurm' and 'der Wicht' can both be used derogatorily for a person seen as small, weak, or unimportant. 'der Wurm' often sounds more like pity or contempt and emphasizes weakness. 'der Wicht' emphasizes more that someone is insignificant, sometimes also cheeky or ridiculous. Both words are unfriendly and do not belong in polite conversation. In this meaning, it is not about the animal 'Wurm' (worm) and not about the legendary creature 'Wicht' (goblin).

Der eingebildete Wicht tat so, als könnte er allein über alle entscheiden.
The conceited wretch acted as if he alone could decide everything for everyone.
Nach der Niederlage stand er wie ein armer Wurm vor der ganzen Klasse.
After the defeat, he stood in front of the whole class like a poor worm.