I think it really comes down to communication. Ideally, the DM would have some level of player input on the chosen setting. Or at least, that seems ideal to me. So if that’s the case, then hopefully whatever races players are interested in will have been given consideration. If there’s some mismatch, hopefully one side can explain their case and win the other over, or some compromise can be had.
Yes, we can all think of players who requested utterly ridiculous concepts that were disruptive and also min-maxed to the extreme.
We can also come up with examples of DMs who just don’t want to allow things they don’t like, and who think that their generic fantasy setting is not generic at all because hey, no elves! Wow.
Putting aside those extremes, I don’t think there’s anything wrong with a setting going for a specific theme, and therefore having some possible restrictions on race and class. I also can’t blame players for wanting to play the options in the book. The Fabulous World of Gwynnthwirl isn’t in the PHB. But Dragonborn are. They’re probably more excited about that than the setting.
So as with most of these things, it takes consideration and communication. Both sides could do with being a little more willing to work with the other side.
One question I have for those who don’t like the plethora of race options for PCs....do you still have gnolls and bullywugs and kuo-toa and drow and ettercaps and orcs and goblins and giants and lizardmen and kenku and fetchlings and shadar-kai and kobolds and so on? Or is it just player options that you want to limit?