Separate species cannot inter-breed. That is the definition. Races can. Also part of the definition.
Subraces, like subclasses, are a way to taxonomically organize things into groups. If there are no actual "generic dwarves" race, but some combination of whatever subraces went into their parents, then "sub" actually puts all those variants on an equal footing. If you are a Deep Dwarf, you would likely look down on some "Dwarf" guy who didn't know where his parents came from, or wasn't pure bred.
And seeing that humans are the progenitors of this "game", I can't imagine the elves in the Enworld readership possibly complaining at the prospect of being called "demihumans", though that may be a lie according to their origin story or cannon in the literature. Sometimes accuracy gives way to expediency. Let's not let political correctness ruin this game too.
When I describe an apple or an orange as subclasses of "fruit", does that tell you apples are superior and more delicious to "fruit"? Or Granny smith apples make better apple pie than red ones? I fail to see any fruit taxonomy racism here. It's just a simple hierachy. It's how we "class"-ify things, nothing more. Grouping things according to abstract properties or proximity in DNA is one of the things that intellectuals do. Perhaps not perfectly, or without bias.
But this is D&D...not the UN.
