On the poll:
Voted for option 3 - the setting determines what can/cannot be played; and as the DM decides or designs the setting that means the DM makes these decisions. In practice there's some option 4 in there as well, but the example given (no evil PCs) ensures I won't vote for it.
As for option 5, my view is that once a campaign starts the major elements e.g. what races/classes/etc. are allowed or banned should be as baked in and unalterable as possible; in particular with reference to what's allowed - if something's allowed once it then has to be allowed throughout, to maintain internal consistency. Something banned can always be introduced later if it makes sense or if something's changed in the meantime - an example from my own DMing is that I started one campaign by banning Monks outright, then a few years in I redesigned the class from the ground up and found an in-fiction means of introducing them so I could see how they played (not well, leading to another redesign later which has worked out much better).
New material that is released after a campaign's start is assumed to be banned unless and until the DM says otherwise.
On session 0: (actually session -1; session 0 is roll-up night)
If I had a session -1 and asked my players what they wanted from a setting/world/campaign before starting to design it I'd probably be wasting my time, as there'd likely be a 1-to-2-year gap between session -1 and session 0 and chances are those players would long since have - quite reasonably - moved on to somethng else.
Instead I just design it, then see if anyone wants to play in it. So far, so good I guess...
On Gnomes:
I've never been a huge fan and, like others here, can't find their equivalent in any significant written works. But some of the most successful and longest-lasting PCs I've DMed have been Gnomes, and so I keep them around despite myself. That said, in my current campaign you have to be (un)lucky to get the chance to play one: they're not a chooseable race in most areas and thus you have to roll on a table where you're somewhat stuck with what you roll (the only out-clause is that Human is always a chooseable option).