The main issue for me is that most settings decide to be a liberal delusion where every place is completely cosmopolitan entirely without ethnic strife (or at best very superficial ethnic strife).
I get the dislike for elves, especially considering the often lazy implementations of them, but they are still my favourite considering that their IMO proper implementation is uncannily close to my own temperament and physiology. Arrogant, elitist, insular, technosceptic, venerates nature and beauty, detached, total and utter lack of urgency, tall, lanky, fair skin and hair, prominent cheekbones. The natural conflics between elves and dwarves/humans are not nearly explored enough in modern settings just to cater to special snowflake players who want no limitations in superficial options. Their longevity not being taken into account in worldbuilding is another reason most implementations are terrible, an adult elf should be a demigod compared to a human.
But that doesn't necessarily mean that elves should be vastly superior to humans on a civilizational level, the human determination, ambition, risk tolerance and sense of urgency gives them several significant power advantages over elves.
Half elves also generally suck as implemented, but I think they actually have a lot of potential in a setting where human-elven relations have broken down and human society has to deal with the few half elves exisiting in their society who could be a dangerous fifth column (half elves would realistically only exist in human society from young reckless elven males seeking adventure and novelty in human society during a time period where they were not despised there, human male/elven female couples are a laughable proposition).
Dwarves are somewhat interesting though I would never play as a dwarven character myself. The anti-elves in a sense, sharing the connection to nature but rather than wanting to maintain the balance of the ecosystem they seek to exploit it for power and comfort. Their strong sense of honor is commendable though.
Gnomes and halflings are thoroughly uninteresting. The idea that they would have any power or influence on a macro scale is laughable considering their physiology and temperament (halflings especially). Though I guess in most implementations they don't, but that raises the question of why they are even included in the first place.
Any setting that allows half-orcs in human/elven/dwarven society is a bad one, can't imagne a realistic setting where half-orc rapebabies aren't systematically euthanized at birth. The only half-orcs that should exist are ones where human women have been kidnapped by orc tribes, which should exclude them as a PC race in most settings unless you have a game based around the MC being a half-orc, in which case all other races (aside from pure orc I guess) are non-playable.
"Black humans", "arab humans", "east asian humans" etc. are only bad in the sense that they have become ubiquitous in settings where they do not make sense. If you want to implement them in your game they should have their own geographically separated civilization with a reasonable explanations for the divergent evolution (e.g. a tropical climate) and not just have them appear in some nordic town without explanation as to why this happened. In a fantasy setting transportation should be very slow and resource intensive so the mixing of geographically separate ethnicities should be extremely limited, unless it's some clusterfuck super high magic setting where everyone can teleport at will but those are pretty much intrinsically terrible anyway.