Charlaquin
Goblin Queen (She/Her/Hers)
This suggests that all races should be opt-out; that is to say, included unless there is sufficient justification not to include them. I rather think the opposite is the case. They should be opt-in, included only if their presence is sufficiently justified. The only reason that should be needed that dwarves don’t exist in a setting is that the setting’s creator (whether the author of an IP the game is set in or the DM) didn’t think they suited the setting. Now, the player could certainly make a case to try and justify the addition of a dwarf character, perhaps pitching a hidden colony of dwarves somewhere in this setting, or some sort of “traveler from another world” backstory for their dwarf character. And it would be polite of the DM to hear them out, and consider their perspective. But if the DM does so, and still decides they don’t think the character is appropriate to the setting, it’s the player who is being rude if they continue to push the issue after being heard out, considered, and turned down.Just saying "no" doesn't make the situation assholish or idiotic. Refusing to explain the reasons behind a decision does.
When playing A Song of Ice and Fire or, say, Elder Scrolls or Europe in 1600s, the reasons behind dwarfs not existing is pretty obvious to anyone who is familiar with the setting -- "well, this world wasn't designed by me, so I can't exactly just add naughty word on a whim".
Otherwise, there has to be a reason for every design decision that needs to be communicated. "Dwarves disappearing a thousands years ago is an important plot point, so introducing a dwarf would break naughty word" or "I had enough of beer and beard jokes for several lifetimes, so I don't want dwarves" are pretty valid reasons.