If your group plays with the DM is only there to make rulings then done of this is relevant to your group. But if the group plays with the DM having the responsibility to make the world and and run the NPCs as well adjudicate the rules then it is a different matter.
The DM isnt a novelist. The campaign should be something collaborative between you and the players. It also shouldn't be 100% up to the DM to come up with the ideas anyway. The players should be putting forth ideas on what they want to play and how they want to play.
As between these two posts, my outlook is much closer to Khaalis. The referee's job is to run the game, which includes running antagonist, or potential antagonist, NPCs. In practice, the GM will probably have the bulk of responsibility for backstory.
But the players get to shoulder the backstory load too.
If I asked friends to play a game of D&D, and then wanted a game with no dwarves or no elves, I might make the pitch, but I can't in any meaningful way
enforce it. If they want me to GM D&D, but playing dwarves and elves, that sounds more fun to me than having the gaming group break up!
This is why I think
compromise is the relevant notion. Taking it as a given that this group of people are going to play an RPG together, what background fiction are they going to take as their starting point?
A few weeks ago, when we didn't have enough players for our regular D&D game, I GMed three of my players through a Burning Wheel session. It was our first time playing BW together, and so when they were making their PCs I made some requests to avoid certain pathways that were, per the PC build rules, available, on the grounds that I didn't think they woud make for an easy entry into the system. The players were happy to accept my advice, because they could see the logic behind it.
I think reasons for restrictions along the lines of "as a mechanical element in play, I think this will cause problems" are more compelling than "as a story element in play, I don't like this" - the first sort of reason is connected to the practicalities of game play, whereas the second looks more like an attempt to dominate the creation of what should be a shared fiction.
The whole entire reason DM's are given the final say so is when the two sides can't agree on something.
This takes as a premise what is under discussion, namely, wheher or not GMs get the final say.
When a group of friends are looking for a resaurant together, there is no rule as to who gets the final say, yet in my life, on the many occasions when I've been walking around with a group of friends looking for somewhere to eat, we haven't ended up hungry. In small groups of people who know one another moderately well and are willing to compromise, decisions can be made without the need to give one person the final say.