This gets at the heart of what I feel is often missed in these discussions vis-a-vis racism being depicted through nonhuman races. They're not human. I know, we get the "humans with pointed ears" argument trotted out all the time when people argue that it's impossible to rp a nonhuman... to which I call BS. Sure, your roleplaying will come from a human place, since we're all human, but that doesn't mean you can't pretend to be Something Else. And sometimes you can do a fine job of it. I'm sure we have all read at least one alien viewpoint character who came across as profoundly nonhuman, even though it was written by a human. Likewise, I've seen plenty of actors portray things that weren't human and do it well. So yeah, I find that argument suspect. Personally, I prefer the opposite approach to dealing with the racist elements in the game from what has been taken over the last couple of years: Lean into the inhumanity of nonhumans, not away from it. Don't make other races more human-like; make them more alien. Don't try to wipe out what makes (f'rex) a kobold not-like-a-human; accentuate it. You wouldn't call it racist if I were to say that humans are smarter than bees, or that wasps are foul-tempered and aggressive.
This tack is a bit of a cop out for a few reasons.
One, in terms of mechanics, racial asi in 5e does very little work in creating the distinctiveness you are talking about. All characters have ability scores ranging from 3 to 20, and most the variation comes in how you initially generate those stats and ASI from
class progression. If it makes your mountain dwarf feel more distinctive because they got a bonus to str at character creation, that's fine, but at the table the halfling fighter next to you may have rolled an 18 str to begin with and then got that to 20 at 4th level, and by that point where the asi came from washes out in play.
Two, in terms of the implied fiction, humans, elves, dwarves and the like are all classified as
humanoid (or as
demihuman in earlier editions). This suggests a certain likeness or family resemblance, and is emphasized by the fact that there are more creature types to indicate beings that are unlike humanoids: monstrosities, outsiders, fey, elementals, who are all more truly different from humanoids (and generally not available as PC options for that reason).
Three, whether the various humanoid beings are truly alien from one another is highly setting dependent. But, for the most part, humanoid beings have societies, languages, customs just like real world human societies. They trade with each other and have offspring and live together in big cities like waterdeep. For most dnd games, there is not much to suggest that elves are as alien-seeming to humans compared to, say, beholders.
Four, and most important, the in-game fiction, whatever that is (species? magical creation?), is not really what we are talking about. The idea that the different societies and peoples in the real world are not actually or fully human was and is a
core fantasy of the racist worldview. It's this dehumanization that allowed for and justified so much violence. So I don't think it's a good idea for an author or in this case game designers to uncritically replicate this dynamic and especially the specific language of that dehumanization (as it has been used historically) when creating a fantasy world.