It feels to me like there clearly has to be some vague lines somewhere delineating a realm of what is ok - or the slippery slope one way leads to grossly offensive stuff and the slippery slope the other way leads to not being able to tell stories that are relatable. I'm not sure where those vague lines are and it feels like they don't need to be fully nailed down. It also feels to me like riding the slippery slope either way isn't helpful (either in arguments or in publishing games of wide appeal as a publicly traded company).
Yes, agreed, and unfortunately most debates end up in a kind of mutually reified strawman. But the problem is, there's no clear, collective agreement on what constitutes that "slippery region," because there's a wide range of views on "what is ok." WotC has to thread the needle and, hopefully at least, not cater to extremes. Not sure they're up to the task.
Exploring the theme of "What if the the world was full of racists?", isn't exactly a strange, magical, fantasy realm, it's the real world. It's a world where lots of people spend the vast majority of their time struggling with the ramifications of it.
I'm not sure what you mean by this, as I can't think of an example of a D&D world--or fantasy world in general--that could be characterized as "full of racists." But certainly, a given adventure or even setting could be characterized by enslavement - that would make for an interesting, "fight for our freedom" campaign, ala the OGL Midnight setting, or perhaps even Dark Sun. And furthermore, fantasy fiction--and D&D worlds--exists in great diversity. There is room for "strange, magical fantasy realms" and also "dark, oppressive, hellish domains." There's low and high fantasy, dark and epic, whimsy and grimdark, etc. I wouldn't want to curtail the number of "strange, new (and old) worlds" for D&D players to explore, just to make the every product palatable to a segment of the gaming populace that wants everything to be a certain way.
D&D is a family friendly game. People should be able to play without having the the harsh realities of real life racism thrown in their face. If you have a group a respectful, mature, adults who want to deal with that sort of issues in you game, as long as everyone is comfortable with it, knock your self out. The actual d&d books should never touch them.
Again, I don't see many D&D products "throwing the harsh realities of real life racism" in anyone's face. There have been specific examples that have been cited over the years, but not only are most of them in the past, but a lot of them are controversial, and only a segment of the gaming population takes issue with them. So while I would agree with you that WotC shouldn't publish stuff that condones Bad Stuff (including racism), it is quite different to depicting worlds in which Bad Stuff happens - and stories which usually involve facing and defeating the Bad Stuff.
Let me ask you: If WotC publishes a Dark Sun setting book, will you take issue if slavery is involved? (assuming that they don't glorify it, which I don't think they ever have). Where is the line for you, as to what is and is not appropriate for a WotC product to depict? Are you OK with simply not buying a book that you don't like the subject matter of, or must every book fit your criteria for what is acceptable (as a "family friendly game")?
The thing is there needs to be an expected rough baseline, or 'default setting' as it were. With notes that the DM can make any changes they want when adapting things to their own setting. The reason being that there are infinite varieties of orcs in across every individuals settings.
Trying to make the core books truly setting agnostic means that you end up with this: Orcs are roughly human sized and human weight though they can be larger or small. And they have similar lifespans to humans but could be longer or shorter. Their skin colour can be anything including human skin colours. Mentally they are like humans, but may also differ from humans.
And at that point you're not describing orcs. You're describing a variant build-a-species system.
It could go that route, but they could still offer a slightly more distinct description, and then discuss different variations of orcs from different settings. "In Greyhawk, orcs look like pigs and are evil bastards, while in Wildemount they attend Ren Faires and are known for their creme brulee." Joking aside, while I think the danger exists for any text to be over-analyzed and sifted through for signs of this or that faux pas, there is a happy medium where they still describe a race that is distinct from humans, and then augment it with specific examples of orcs from different worlds - and by doing that, they can offer a range of orcs.
In the past, ethnicities lived farther away from each other. It was easier to think in racist ways. Today, all of the "races" grow up together in the same school classes, play in the same games, work together in the same jobs, and are each others neighbors, friends, and family members.
Today it is obvious that racist generalizations are wrong and toxic.
The vast majority of people wouldn't disagree with this - as a general statement. Where people mostly disagree on is more in specifics, such as what constitutes 'racists generalizations" and whether or not, or to what degree, fantasy should follow the same rules as reality.