It kinda always was the case in the setting, though, until WotC started to cover it all with glitter and pink paint because they don't want their newer players to be - gasp! - offended by a fictional setting, which people are all too happy to project real-life issues onto in an even more exaggerated form than they already exist in rather than deal with/face those issues in real life for a change. I do agree that the PC should have more options to bite back to such remarks, though - taking them passively definitely wouldn't work for every character out there.
The double standards for such a mindset do fascinate me, though. Apparently the Witcher's (to name one example) racism plays into the setting and is an integral part of it (which it is, and a lot of narrative points and the state of the world are dependant on it), and nobody lifts a brow, but apparently here it's wrong and shouldn't exist and Larian are bigots for writing it this way.
To be clear, that's not what's being asked for. As I said - it exists, and that can and should be presented. What matters is how it's presented, and how a piece of media treats it. Terry Pratchett depicts the strong currents of racism, both macro and micro, as being destructive, limiting and generally a source of people being their worst selves, and often giving in to or holding onto those prejudices are various characters' downfalls. It's shown to be strongly present, but also ultimately not healthy or productive. Vimes is, in his beginnings, a very potently racist character, but he's also clever enough to realise where that behaviour and those beliefs are leading him astray, doing him harm, or causing him to squander opportunities, assets and help - and the contrast is often where he overcomes a bias of that nature, while the figures he is pitted against, and ultimately gets the better of, do not.
Faerun has a lot of racial tension in it, and that adds to the flavour of the space, and it shouldn't be sanitised away, absolutely not. That's different, however, from filling your space with racist language and behaviour, and presenting it as normal, natural, okay and not worth commenting on. Larian treats racism as a joke, or as a 'normal mode of being' - neither is good handling, and it's made worse by the fact that we are forced to play a character that is comfortable with that behaviour and passively abides and accepts it.
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Larian made their own world space - They created Rivellon. They *chose* to create a world that had deeply
god-supported and god-encouraged racism built into its very core, and they wallowed in that gratuitously, had most characters engage in it openly, and even displayed it in the characters that were treated as a goodly and heroic, and had no-one act like it was anything other than completely acceptable. They made that world - that was their choice. They could have built the world any way they wanted, but that was the way they chose to make it. Our characters were made complicit in this as well - it was a backdrop that we were forced to be a part of and even participate in. And it was disgusting.
Larian did not make the Forgotten Realms. They don't have that liberty here. A great deal of racial tension exists in the realms, but it is not treated as a good or acceptable thing by the majority of goodly people, not here. It should not be normalised into everyday acceptance here.
No-one sensible is saying that racism shouldn't exist in the spaces, or that it should be entirely removed (Note: the people that WotC are apparently listening to the most right now are not, on the whole, sensible people, and I'm in the camp that feels that they are destroying the flavour and the soul of their IP with many of their recent moves). What matters is how it is depicted, and how that depiction is then handled.