Weirdness from the GM/player perspective. Building a credible world around a few related races is much better and more believable than trying to cram "weird" PC races into the mix. You can read more on the subject from the creator of the game.
Yeah, I kind of feel the same way. Suppose you design a campaign world so that it will have a particular sort of atmosphere to it. That may just not be compatible with the way the game designers have visualized certain races. You can reimagine them, but there is more work involved in communicating that to your players, who are likely to be more familiar with the 'default' way they are envisaged.
Plus you'll always have those players wandering in and out of most campaigns who aren't all that familiar with the world and show up with 'joe the deva' or whatever. It isn't the end of the world, but sometimes it does kind of put a dent in the setting.
The problem with just banning certain races is twofold. One is that the game actually kind of depends on those races existing. That was not true in earlier editions, but in 4e there are just a lot of classes and builds that work a LOT better with dragonborn, and if you don't happen to want to include that race in the campaign setting, then it does have some impact on play.
Secondly you WILL get player pushback. Players usually don't really care so much about atmosphere. They're busy worrying about hitting things and getting from here to there. Unless the setting is REALLY extraordinarily in your face players are just going to basically be like "yeah, so what your world has intelligent plants instead of Tieflings, I want to play a Tiefling Warlock!" What are you going to say?
Not that I'm complaining about having more races, it would be ridiculous to imagine WotC designing their system around what I want in my campaign.
In the end if you want things to be just exactly so, then write your own setting appropriate RPG. Otherwise you gotta take what you get.
Oh, and I entirely concur, the definition of Demi-Human in 1e was "player character race" and things that were not were Humanoids. It was always a blurry distinction though and there was never a really precise definition. Then of course 2e splat books included all kinds of "Humanoid" races into the ranks of playable races and it became meaningless, but remember, 2e didn't come out until 1989, that was 14 years after we started playing...