Kinder reader Inflection wanted
I don't think think it should be this way. It can. It certainly wouldn't be wrong to. But when I think about it, how does having a more consistent world in this sense make the game more enjoyable for the people at the table unless certain people at the table are having their characters try to breed with other PCs and NPCs.
I've yet to run a game like that. I've got to use too much of my brain power to figure out if my players stupid ideas succeed or fail, or what how to map their insane idea onto a die roll to worry about the metaphysical like this.
Actually not knowing these answers could possibly lead to more interesting scenarios. Perhaps it's some researcher's quest to discover these mysteries. Perhaps he's doomed to never know.
Still it could just be that humans and dragons can interbreed with most humanoids, and most humanoids can breed with humans and dragons, but apart from that species are not compatible? Because human gods are freaky and dragons don't give flying flumph for conventions, even divine ones?
I can't say you are wrong, however I would say having set rules can be just as freeing or even more so than having none. Which is why we play with rule books to begin with. It prevents argument, sets standards, and means not having to come up with a rule judgement on the spot which might not the best choice. If you want to play homebrew... go ahead, but is it not the point of picking a setting and playing within it to have set rule, places, and expectations of character interactions base on that setting lore. So I don't dismiss the value of homebrew and playing to your whim, but I do value a fleshed out setting or I would not use them.