Species used to designate different types of animals predates Darwin by over two centuries. I assume it is used by most of the 40% (or whatever) of Americans who don't believe mankind arose by evolution? If it works as a term for Lamarck, Darwin, and many modern creationists, it felt ok for whatever is going on in D&D to me. Once told the Dwarves were created by Moradin, it doesn't feel to me like calling them species would make people think they weren't evolved from something else. [Insert link to digression on "kind" vs. "species"].
I'm guessing that's disputed by the approx 40% of Americans I mention above.
In your D&D world and Tolkien's. And in our world to some.