It's the DM's job to put together fun adventures, an interesting campaign world (or at least to portray an interseting campaign world), and possibly to develop an intricate plot.
It's not only the DM's right, but his responsibility, to ban material that's going to make it harder for him to do the above. And yes, that includes sometimes banning races, classes, alignments, or what have you. I rarely allow evil characters, for instance, and I feel not one shred of guilt for doing so. If I'm running a Conan-like game, I'm going to ban most of the non-human races for PCs, for the sake of the aesthetic.
This isn't about power, and it isn't about entitlement. It's about the DM creating the world and setting in which he wants to set his game, and nothing ruins a game faster than a DM who's not enjoying it.
Is it possible to abuse this? Absolutely. But that doesn't mean that it's always an abuse, or that it's unreasonable. Frankly, I'd rather a DM who has a strong enough sense of his intended aesthetic that he's willing to say "You know, X won't really work in this campaign" than a DM who allows everything, even if it won't work for the adventures or world he has in mind.