I have been uncomfortable how D&D has portrayed some species for decades. Literally having evil versions of species you can recognise by their (usually darker) skin tone is so obviously offensive that I am amazed it ever got written. They're moving away from that, though I still think in awkward way where you still need to have "bad groups" and "good groups". And of course for example dragons have still skin colour coded morality.
But I think the biological essentialism discussion has certainly gotten weird. Different species are defined by them having essential biological differences to other species. Dolphins just are better swimmers than humans, hawks have better vision and are better flyers etc. Now humans, all being of same species really do not have such essential differences among themselves, but a lot of racist ideology is based on claiming that such differences exist. But by saying that this setting has actual different sapient species sort of implies saying that these different sapient groups have essential biological difference. If it is problematic to create this sort of fiction, then fantasy species cannot exist, perhaps beyond cosmetic.
Personally I never found it problematic that wookiees are stronger than ewoks. Now I am not saying that people who say such things are problematic are wrong. They might very well be correct, but if that is the case, then we must accept the logical conclusion that differnt fantasy species cannot really exist. I think the current approach where the differnces are sort of minimised, but still partly exist is just confused.
I don't think current D&D knows why these species are in the game and what to do with them. They lean very heavily into "everyone can be anything and the species are not really that different" which means that the species have little thematic or mechnical identity, yet choosing a species is presented as a major chracter building step instead of just being some fluff like choosing your hair colour.
I think it's a pretty core premise for modern-day D&D that PCs are not some representative sample drawn randomly from a generated pool of NPCs.
PCs are intended to be more like the BG3 Origin characters; they're going to have special, comic-book style backstories that explain their combination of background, species, and class powers.
Likewise, as a player, you should also understand that an 18 Strength halfling is a little odd and more out of place than an 18 Strength human or orc or centaur, and probably has some kind of supernatural rationale as opposed to "I really like to hit the gym".
This is how a lot of people see it, but I have never liked this approach for D&D. To me this is bad fit for a game with predefined splats you you build your character with. If your halfling is some sort of special super halfling that is as strong as a strong human,* then why you cannot have a special halfling with dark vision or, hell, a fire breath? If we have these species splats, then I feel they should actually tell us what the species is like in the setting instead of just be an arbitrary rules packages. I think the approach you describe would make far more sense in more freeform character building system that lets you pick any powers you want and then invent fluff to justify them.
* And I for one do not think that this is particularly cool or interesting concept. I mean it would be if it was uncommon, but when it is basically every PC halfling that has use for high strength, then it is not creative or interesting.
Of course a lot of this in D&D stems from how closely the classes are tied to certain ability scores, and it encourages boringly repetitive builds. Every barbarian maxes strength, every rogue dex, every sorcerer charisma etc. There should be more varied ways to build your character, and I don't mean 4e way where they just basically gave up and had feats that let you attack with any stat. At that point there is little point of having ability scores at all. This is not good regardless of whether different species have different ability scores or not.
And incidentally strength that is the perennial stumbling block on these discussions and the ability that is by far most liable to cause dissonance is the one stat that at least somewhat does this OK in the modern D&D. You can actually be an effective warrior without high strength and using dex leads you to choosing different gear and different feats etc, leading the character to play at least somewhat differently. It could be better, but there at least is some choice that has some impact on gameplay. This is sort of thing the game should have more, so that there would actually be some choice in ability score placement and it would not be a disaster if some species could not be great in all of them.