It is my humble and fallible opinion that any kind of censorship is inherently totalitarian. I happen not to be a big fan of totalitarian systems. Not to demand limits to imagination in the name of political correctness or representation seems appealing to me. I could be wrong, but so could you.
The inherently volatile nature of systems of morals results in a huge array of contradictory ideas of right and wrong over time. That means that most of these ideas must be wrong and a maximum of one could be correct. Probability suggests that we should remain highly sceptical of our own moral ideas and ideals.
To clarify, I do not mind drow or greenies or other races, humanoid or non-humanoid, getting fleshed out more. But the assertion that no single intelligent race can ever be described as "evil" from the perspective of the arbitrarily defined "goodly" races strikes me as forcibly anthropologizing the entire setting. And that's too much. We are not the only creature in the world, not are we so interesting that absolutely every story ever should only involve humans in every single role, even for the non-humans.
A refreshing breeze of not anthropomorphizing fictional species and races.
Empirical turn:
Is there any proof that racism in video games causes racism in reality?
Only then would there be reason (if accepting the current morals as true) to change the games.
To answer the last part first, I don't know if any game has ever caused racism in reality. I don't really think it matters either. The issue is not that a clumsy handling of subrace levels of pigmentation is going to make Klan-cloubhouses pop out everywhere, but rather that there is a growing understanding that a particular way of describing something is actually hurtful. And why cause hurt when it is not necessary? It's the same thing with the f-term for the non-straight as a "casual insult". Same thing with the r-term for what are in general well-meaning people who just happen to be born with lower intelligence. Same thing with using male pronoun instead of neutral "they" when gender is unspecified.
It might feel a bit too "woke" for you, but humanity has a fairly long record of doing something for a while, then figuring out that it probably isn't "right" and "proper" to do that something, and then increasingly trying to not do that. Slavery, gender equality, human rights, and so on. That something used to be done is simply not a strong argument that it ought to be done some more in the future.
And if we break it down a bit, cut away the fluff, then the issue is not that hard to see. Having a fairly human-like race that is by and large divided by skin color, with all the white members being "good" and all the black members being "evil"? That's probably not a good idea, in retrospect. Not because it promotes racism, but because a whole lot of people have actually tried out that "fiction" in real life. Taking their misery and using it for what is ultimately fun and giggles hardly feels all that respectful.
That out of the way, there certainly are things that by any reasonable standard should be subject to censorship. How to build chemical weapons from kitchen supplies, for instance. Imagine the ramifications of that being common knowledge. Or how to build nuclear weapons in 25 easy steps. If such knowledge was common then humanity would surely destroy itself. It thus follows that there is knowledge that has to be subject to censorship if we hope to have some form of civilization. It thus follows that even anti-censorship sentiments can possibly be taken too far. This is a rather extreme argument, obviously, but it falls short of fallacy by absurdity because we don't know that such knowledge actually would absurd. At least I don't.
