I think I remember this question asked a while back. Here’s a slightly expanded version of my answer.
In my world, orcs and goblinoids are one people, called “Orschans”, with a varied appearance and size. Their origin is from an ancient empire, thousands of years ago. This empire had a new dynasty rise to power, who caused a religious schism. The old believers, who held fast to the ancient worship of demon lords like Orcus, fled the empire after a persecution to the south, where they adopted the name “Orschan”, ie, “Children of Orcus”.
Here in an attempt to reclaim what was lost their intellectuals delved deep into the science of “fleshweaving”. Even before the religious schism that brought them there, it was a magical science common in the empire, bringing forth a whole bunch of “Beastfolk” (ancestors of lizardfolk, minotaurs, tabaxi – basically any man/animal hybrid species in D&D), but now they sought to combine all the work done before to elevate themselves into something more than human.
The result was the creation of orcs, goblins, hobgoblins etc. Those who became orcs had some elvish ancestry, the transformed gnomes became goblins, etc. Outsiders took the new forms of the Orschans as confirmation that they were “ugly inside and out” and let that justify unending wars of racial hatred, seeing the Orschans as “fallen”. For the Orschans, however, all they noticed is that they were now bigger and stronger, with their minds as sharp as ever – so how were they not superior to what came before?
In the modern period “Orscha” is a giant cosmopolitan empire. It indulges slavery and cruelty, but there are also more “liberal” areas as well. The Orschans are as varied a people as any other race.
I don’t have any fey connection to my goblins – except when you count some distant elvish ancestry in the orcs.