Well, to start with the remedial stuff,
World of Warcraft's playable races are divided into two factions: The Horde and the Alliance. The Horde originally included orcs, trolls, tauren (basically Native American minotaurs), and a "race" of intelligent undead called the Forsaken. The Alliance originally included humans, night elves (tall, purple-skinned "wild elf" types), dwarves, and gnomes. Since Alliance races tend to be prettier, there tend to be a lot more Alliance characters on any given server. Also, for whatever reason, the Alliance seems to attract younger players, on average.
The recent release of the first WoW expansion,
The Burning Crusade, added a new race to each faction. The Horde got the
blood elves, who are essentially a race of magic-addicted "high elf" types, and are considerably prettier-looking than the other Horde races. The Alliance got the
draenei, who have way more convoluted backstory than I'm gonna subject you to, but look much more
interesting than the other Alliance races. This has caused some annoyance for Horde players who don't wanna see elves running around their cities, and who would love to play as draenei, but don't want to cross the faction line.
Also, as Flexor mentioned, the new races have access to character classes which were previously the exclusive property of the opposite faction, and that bugs some people a whole lot.
It's been theorized that giving the Horde a "pretty" race was a move calculated to balance faction populations a little bit, and thus help the Horde out in player-vs.-player competition. Personally, I think the decision was at least
partly in response to WoW's huge popularity in Asia: The blood elves are kind of anime-looking, in a way. Certainly, they're a lot closer to the character design you see in the
other MMORPG that dominates Korea,
Lineage 2.
Incidentally, humans, night elves, and blood elves are currently
the most popular races in WoW, while orcs and trolls are utterly neglected. Damn, but people depress the hell out of me.