In my setting the races matter very much. My races differ from the standard D&D races in the role they play in the setting and the relations between the different races (and nationalities for that matter). They have developed over the course of many editions of D&D with my own twists as well. My Gnomes are rustic relatives of Dwarfin kind. Originally Dwarves, they lost their fortress holding, scattered and dwindled. They learned to fit in with other races and act as stone workers and smiths from either hill steadings or caravans. They often live near / with Halflings or Humans. Not the current versions of Gnomes. This would have been fairly typical in the 1970s, not so much now. Other races and monsters differ more than Gnomes from the norms of today (or back in the day). My Wood Elfs for example are nomadic, xenophobic and afraid to gather in large numbers. They are a race locked in a culture that developed from centuries as refugees in an ancient war with all the quirks that brings. They refuse to enter cities or towns are amazed that people settle down in villages and are paranoid about strangers. Even High Elfs are viewed with suspicion. Gnomes are not uncommon and are viewed relatively positively by many people. Wood Elfs are considered exotic, wild, and dangerous (by most anyone except other Wood Elfs). Every race fits in differently and many nations exist with their own relational dynamics. I have player races not in other settings and some common races from current D&D don't, for the most part, exist. It's part of the history and development of the setting.