Wow, I spend an afternoon and evening playing (16 hours straight LOL!) and LOTS of feedback! Cool.

I'll try to get to most of the points you all have brought up, but if I miss anything I apologize for it. Anyway, here we go:
When I mentioned the discussions we've had as a group, and reiterated my point, it was because my players agree with me (not because I didn't want to express their opinions). Now, mostly they ARE new to D&D, and I believe they are hesitant to disagree with me knowing I have more experience, but that is why I am doing it this way: to try to get them involved in the game and make it their own, as well as mine.
We didn't have time to discuss the changes in great detail, but I had time before the entire group was together to go over much of it with the others. For the most part, they liked them and had some suggestions. One player asked about switching out proficiency and advantage for Sleight of Hand (for Gnome) with maybe Deception or Persuasion. I'm fine with the idea, but when I prompted him about WHY, asking for a reason solely based on the racial concept (not tied into a particular class), we couldn't come up with anything to justify it. That isn't to say we won't think of a reason, or one of you might have a suggestion that works, but for now the idea is benched.
I don't run my games as a tyranny. Before any changes or house-rules are implemented, everyone has to agree (or at the very least, not object LOL) to them and why we have them.
GNOME & HALFLING SIZE & ENCUMBRANCE
First, they aren't adult "humans", they are adult gnomes and halflings. While I agree the 40-50 pounds estimate is low, and human little people in our world are stronger than many people think, gnomes and halflings aren't human little people--they are a different race entirely.
If we decide there is no Strength penalty or encumbrance penalty, then it must be because these races are exceptionally powerful given their height/weight ratio and muscle mass. That could well be the case, but it becomes a game-world decision.
But in the time we had yesterday, a player brought up the idea of the Small races making other Strength-based actions as easily or well as Medium characters. Can a Gnome and Halfling Long Jump as far as Human or Tiefling? But then another brought up Dwarves. They are shorter as well, with shorter legs, how well would they do in Jumping? ("I canno' make the distance, you'll have to toss me.")
So far our group agreement is we want the rules to make sense, but we agree not at the expense of too much added complexity. If we don't find a solution that works, we probably won't end up changing anything. But for now, the group will keep talking it over along with the other points.
One point about armor. A house-rule we will most likely end up using is armor that is worn only counts half its weight towards encumbrance. It makes sense that wearing the armor as intended is much easier than trying to carry a suit around.
Strength is not just a measure of muscular power, but also the characters ability to use their Strength effectively. When I was in high school, I only weighed 145 lbs at 5' 8", but I could leg press just over 1000 lbs, the second most in the entire school (the running-back for the football team beat me by 90 lbs...). As most people with any knowledge understand how hard you hit starts with your footing. Power travels up through your base, with the turn of the hips, into the shoulders and finally into the arms. That is why I didn't just impose a -2 or worse Strength penalty. I didn't want to penalize Strength-based Small character builds in combat this way.
Another aspect of how much encumbrance a character can carry is the amount of space available on them. Medium creatures, being larger, simply have more room on their frames to carry more. The chimpanzee argument is a good point, however, but that more justifies how Small Gnomes and Halflings COULD hit as hard, but less so for how much they can carry IMO.
Those ideas do make me think however, that I might suggest to the group a simpler change that the encumbrance penalty only applies to the amount of weight carried, not the amount they can lift, drag, or pull. Food for thought and discussion.
I don't know exactly what the designers were thinking here. I would prefer a simple, elegant solution, sure. At any rate, honestly, it is NOT a big deal except that is just tugs at my sense of plausibility.
DRAGONBORN TOUGH HIDE
My concerns about this is something like the Barbarian and Monk Dragonborn. Unarmored Defense as a Barbarian already grants Con bonus to AC, rendering Tough Hide pointless in that aspect. True the DR is still there. The Monk Dragonborn would end up with Dex, Con, & Wis to AC. Not a game breaker normally, but taken to the extreme (AC 25), it gets OP.
As far as Dragonborn not wearing armor, that would certainly be the case in some situations, but I don't see a problem with it. Dragonborn with average to good Constitutions (say up to +2) would not bother wearing light armors, sure. Those with great or better scores, +3 to +5 even, would tend to avoid medium armors as well. The natural hide of their dragon ancestry is tougher and more protective than manufactured armor. However, heavy armor for warrior-type characters would still be better than the Tough Hide feature. It doesn't vary too much from the AC feature of the Dragon Hide racial feat, anyway.
HALF-ORC BROAD BACK
Yeah, we all agreed the advantage on all Strength checks was too much. For now, the rewrite is this:
Broad Back. As a bonus action, you can steel yourself for great feats of Strength. You gain advantage on the next non-skilled Strength-based ability check you make during this turn.
In other words, for things like bending bards, breaking down a door, holding open a closing portal, the character could gain advantage on the check by spending their bonus action for that turn. It wouldn't help with Athletics or Strength-based Intimidation written this way. And with the associated cost of a bonus action, that could be a factor depending on the situation.
Finally, since I am not allowing the big guy races at this point, it allows Half-Orc to fill that role in some ways.
SHADOWSIGHT
Since we play in the basement, we had some fun turning off the lights and walking around making "Perception checks" in the dim light provided by the tiny, remote cellar windows. It WAS fun LOL! Later in the night, we stepped outside for a chilly bracer to give us a boost to keep playing until 4 AM and thought again about Darkness RAW. We decided this as a basic concept: If you can read in the light, it is bright light at that range. If you can see the words, but not make them out (due to light conditions, not distance), it is dim light at that range. If you can't see the words at all, it is darkness.
We agreed the idea of a clear starry night or moonlit night being Darkness was ridiculous. It takes a bit for your eyes to adjust, sure, but then you can see fine. We agree about the disadvantage on Perception checks, still (you can't see as clearly to be certain), but yeah, let's keep those Elves out camping under the stars and NOT bumping into everything.
It would make things easier to just remove the range limit for Shadowsight and Darkvision. Most of the time when they are needed, the ranges aren't a big factor IMO.
SUBRACES & ABILITY SCORE INCREASES
I do like the versatility of choice in some ways that would lend it to "subrace choice" if the player wanted. I already changed Half-Elves to getting Dex +1, Int +1, and one ASI of choice. I am still tweaking the ability score modifiers for my group to finally review.
Any subrace that a player wants to play for flavor could easily be represented by the players choices in skills and possibly feats instead of having to grant special racial abilities.
Honestly, the group (including myself a bit) are still on the fence about this. But either the other races have to be brought up to the same power-level as the Dwarf and Elf races, or those races have to be brought down. The easiest way is to remove subraces abilities.
IN SUMMARY
The short time we had for discussion led to some great points by some of the players.
Final point: as to the discussions of this thread deviating from my OP. I don't care if posters debate such things, but when they address myself in their post, that is when it bothers me. You're right, they aren't pointless for everyone here, just me.
