The reason isn't just the one I mentioned yesterday (the tendency towards "I want to be a good Xer, therefore I must play a member of race Y, because they are the best Xers" as Anonymous put it). I think it's also because Demihuman player characters ruin the sense of mystery that comes with the exploration of something truly weird and fantastical - which is one of the major cornerstones of D&D. They make everything mundane: Melville's banalifying systematisation, rearing its head again. I much prefer the theme of strangers in a strange land, and you can only really explore that fully with human characters at large in a world full of weird and incomprehensible things. Elves and dwarves and the like would be infinitely more interesting if they were unknown and unknowable - the alien "other", permanently present and yet never understood. Rather than, basically, humans who like trees or humans who like mining, respectively.
I've quoted this passage by M. John Harrison before, but the more I think about it the more I start to see his point:
The moment you begin to ask (or rather to answer) questions like, “Yes, but what did Sauron look like?”; or, “Just how might an Orc regiment organise itself?”; the moment you concern yourself with the economic geography of pseudo-feudal societies, with the real way to use swords, with the politics of courts, you have diluted the poetic power of Tolkien’s images. You have brought them under control. You have tamed, colonised and put your own cultural mark on them.
The part of me that finds great excitement, pleasure and comfort in creating finely realised fantasy world rebels against that statement with every fibre of its being, but the other half of me - which likes mystery and strangeness and romance - finds it compelling. How is it possible to reconcile the competing desires for systematisation and non-banality? For me, it's the key question not only of D&D or role-playing but of fantasy literature. Demihuman player character races are at the exact point where those two competing desires come together and are repelled; do you systematise elves to make them playable, but in doing so make them banal? Or do you preserve their sense of magic and mystery, but in so doing make them inaccessible? Not a question to keep you up at night, maybe, but one that I think the hobby itself could do more to consider.
I suppose it should come as no surprise that OD&D is the version of D&D which comes closest to reconciling both positions: although it strays into systematisation with its statting-out of the fantastic, it keeps this to a minimum while also providing a bare-bones framework on which to hang whatever strangeness your mind can come up with. There is no Forgotten Realms-esque bloat, no endless anal-retentive cataloguing of pointless minutiae. There is freedom for the unknowable to exist. Maybe there really is more to the old gal than meets the eye.