In D20 Modern, there are two campaign styles that work that way: Shadow Chasers, and Urban Arcana. Everything is basically divided into two groups, Mundane and Shadowkind. Mundane folk are sort of like "Muggles" from the Harry Potter novels. If they see something they weren't expecting or can't explain, they think: "...Naaah..." and their subconscious mind invents some fiction to make it seem innocuous.
For example, if they meet a female drow in a nightclub, they would see her as an exotically beautiful human woman with platinum-blonde hair and a deep suntan. An orc gang member would seem to be a burly, extremely ugly human biker.
Also, most intelligent Shadowkind beings have tried to assimilate themselves into modern-day culture as best they can, to the extent of adopting human customs and using common names instead of their own traditional naming conventions.
Another thing to remember is that magic is far less prevalent in D20 Modern. Spellcasters are rare, the highest level spells you find are 5th Level, and anything beyond that requires special rituals. Pretty weak compared to, say, a Forgotten Realms campaign setting where there are dozens if not hundreds of super-powerful Archmages. On the other hand, you have this neat-and-wifty stuff called technology...
