Most fantasy stories take place in a low tech, low culture society. That's a nice, simple way of saying a less developed society or an under-developed society. In a low tech, low culture setting, it's ordinary for a person to resemble the culture they grew up in, and to reject another culture that is incompatible with theirs, and also to experience culture shock when they encounter a new culture. It's also ordinary for many places to be genetically homogenous because travel is difficult and dangerous, and most people rarely leave the village where they were born. It is therefore ordinary, common, and normal that all elves would be like this and all dwarves would be like that, with the exceptions to these norms being found scarcely in places like an adventuring party, though even there, they may not differ by much.
Language would also be simpler, probably due to the lack of standardized education and lack of cultural sensitivity. Cultural sensitivity may have been practiced in places with diversity such as port towns or trade towns, but not so much in places with a predominant culture, which would be more places than fewer. Most people having basic education at best would use simple words like kind, kin, folk, and race rather than species, ancestry, or heritage. Examples, the race of man, the race of elves, mankind, elfkind, dwarf folk, elfkin, etc. People would not likely say "in my culture, we do this" when they could say "my people do this."
One may describe this as racism, and they'd be right by definition, that you have a race-based belief, however, I wish no one would call it racism because this is in no way racist against actual races. It's unfair to call such gamers racist unless they're racist against real human ethnicities. If someone overhears one calling someone a racist and they're unaware that the context is a make-believe game, there could be real social penalties for someone. For the record, no, orcs aren't black people at my table, but yes, all orcs are innately stupid and evil at my table, like Nazis. People aren't so stupid that they will play a game of D&D and learn that all races are the same. I think that's a misanthropic position to take, and such people should be as embarrassed to insist that D&D racism leads to real-world racism as people who say that video games cause violence.
If we look at the term white-wash, it means to take something ethnic and change it to make it appeal to white sensibilities at the expense of the ethnic sensibilities. This is a racist term only if you think that it only applies to white people, that only white people can white-wash something. Anyone can white-wash something. I think that modernists trying to change a hobby because all dwarves are like this and all elves are like that by calling it racist are attempting to white-wash D&D for modernists sensibilities. It's a fantasy game and part of its appeal is a period setting. Inserting your modern sensibilities by including diversity and removing racial tension, which is a legitimate form of conflict in any setting and any story, takes away the period setting. It takes away the edge of the game, making it more milk-toast. By normalizing diversity of races in a fantasy setting, it makes the setting feel exotic rather than fantastic. If everything is fantastic, what's fantastic about being fantastic? The extraordinary is now ordinary when tieflings, people WHO LOOK LIKE THE BIBLICAL DEVIL and who are supposed to be very rare, are cute waitresses at the local tavern or whatever.
