The word "racism" itself, carries negative connotations that preclude its use even where appropriate.
Are elves racist against orcs? Sure, but since in the context of the fantasy milieu where orcs have been predetermined to be evil by the dark gods or genetics or what have you, then there is nothing wrong with elven "racism".
Indeed if the elves were tolerant and accepting of the orcs they would be setting themselves up for betrayal and destruction. Because the orcs, who we know are evil, would simply use the tolerance of the elves against them to destroy them and enslave them.
Thus elven racism against orcs is justified and necessary for their own survival. It becomes good to destroy orcs in much the same way you would destroy a virus that had invaded your body.
Now if you play in a fantasy world that more closely mirrors the real world, well then racism does become evil. If orcs have the same moral capacity of a human than you can't simply judge all orcs evil and kill them on sight. At least from a 20th century modern morality perspective.
The problem lies in DMs who run a world of fantasy medieval brutality and thinking and then try to impose modern morality on the players.
Either your world is medieval and brutal for BOTH the players and NPCs or it is not. If orcs rape and pillage in your world, then it is not fair to judge the players or the game itself as "racist" for killing orcs on sight and condemning them as "evil". The orcs ARE evil within the context of the game's "reality" and the notion of racism as we understand it in 20th century America is completely irrelevant.
A game based on fantasy medieval thinking, ethos, and morality where the gods are REAL and so is magic cannot be judged with the social and cultural yardsticks of our own vastly different world where we have no gods (at least visibly), no magic, and no orcs.