Here's the thing:
All this stuff about all the hard work the DM has to do to incorporate a non-setting species... is bunk.
That is an opinion. A very declarative opinion.
There is no requirement for the DM to do any extra work at all. That's something people are using as an excuse or a self-imposed limitation to put on themselves. There doesn't need to be a hidden elf village. There doesn't need to be some grant treatise of where their people came from. You don't even need to remember to throw in NPCs of the type if you don't want to.
There is no requirement. Good observation. This is why I draw a distinction between those DMs that do and those that don't. But according to your above statement, it doesn't matter if they spend two years and wrote 500 pages on their world. There's no
need for them to have any of it. Just as there's no
need for them to not let a player choose something not in their setting. There is also no
need for a player to have to play a specific race.
So, my questions to you are: Should we fall on the side of the person that has put in a hundred hours of hard work or the person that did two hours? Should we fall on the side of the person that has an intimate knowledge of the antagonists, the culture, the conflicts, the geography, the resources, etc. or the person that knows a limited amount about the setting? Should we fall on the side of the person that will try to create character arcs for
all players' characters and include their motives and backgrounds or the singular character motive?
The answer is simple, although you won't make it such. My guess is because you won't draw a distinction between a DM that has put in the work and one that hasn't.
How many times have you had someone play and elf and ask for storytime about how the elves came to be the prettiest ponies of all? I'd wager never.
I never have. The reason? Because if we are playing a setting that has been worked on a lot by the DM, then this is learned throughout the story. Throughout the lore. Through show don't tell. And when it happens, the player (myself as a player included) is delighted there
are reasons. Delighted there
are rationales. Is delighted there
are justifications or logic. And this especially holds true when it is connected to the other sources in the game - as opposed to having been thrown in and forced to fit.
All the DM has to do. ALL they have to do is not make an issue of it.
All a player has to do is look at the body of work and say, "I appreciate this hard work, but it's not for me," or "I appreciate this hard work, so let me think on it," or "I appreciate this hard work, so let me build something that fits." Of course, you seem to not distinguish between a DM that has worked and one that hasn't, so this may be a moot point for you.
People are either putting extra work on themselves and blaming the players, or they are so vehemently against another person's having fun they don't approve of that they will claim to totally ruins their fun as a defense of their attempts to take fun away from the other guy.
Blaming players or ruining fun. Those are your only two options for a DM saying no?