Because there is no such assumption? No one assumes that all races exist in all settings and this is some bizarre rabbit hole that people have constructed as an argument.
And, AGAIN, everyone agrees that there are perfectly reasonable reasons for nixing a race. Someone taking an elf in this case would cause problems for the DM. Ok, fair enough, don't play an elf. EVERYONE AGREES WITH YOU. Is that clear enough?
Now, OTOH, if your setting simply didn't have any details about elves, and I brought an elf to the table, are you going to have the same reaction?
I remember years ago playing Scarred Lands and realizing during a Session 0 that there were no gnomes in the setting. They simply didn't exist and weren't mentioned anywhere. ((They were added later in a later supplement, but, I didn't have that one at the time)) When the player said, "Can I play a gnome?" ((Which is when I realized that there were no gnomes in the setting)) I allowed it because, well, there wasn't any particular reason to disallow it even though the setting itself didn't contain any information and I had to add it in. Or, rather, I let the player add it in.