There's a couple of issues first, that need to be put to bed. 1) Races in D&D are offensive stereotypes. I don't get this one. I hear it a lot. But who in the world is supposed to be offended by the notion that, say, elves are tree-loving hippies? There aren't any actual elves to be offended. It's a quick and dirty shorthand to give players a potential roleplaying hook on which to hang their character. That's it.
2) Races in D&D aren't really very alien. No, and I'm not sure that's a bad thing. The races in D&D were originally mythological or folkloric creatures, filtered, largely, through the lens of Tolkien. And as such, they represent almost caricaturized versions of a single slice of what it means to be human. This begs the question; if elves, dwarves, and whatever else are really just caricatures of a single aspect of human nature, why do we need them at all? Why not just have humans? The answer being, of course, that we don't need them. It's just fun to have them. Variety and color is fun for its own sake, even if it doesn't actually do anything else for the game.
3) There's too many races in D&D. It makes it feel like the Star Wars cantina scene. This is certainly true. Especially if you consider the monster races. It's bad enough that you've got humans, dwarves, elves, half-elves, halflings, gnomes and half-orcs... and subraces of many of those, but of course, you've also got orcs, goblins, hobgoblins, bugbears, gnolls, and many, many, many more.
Then again, I kinda like the Mos Eisley cantina effect. Look at it this way; having the options in print doesn't obligate you to use them all, but it's better to have them and not need them than it is to need them and not have them, right? Also, for some campaigns, the Mos Eisley cantina effect is fun. This is a fantasy game, not a historical simulation. A lot of weird, colorful races can go a long way to demonstrate that fact repeatedly; "I don't think we're in Kansas anymore, Toto."
That's my take on fantasy races, then. They add color and flavor and variety, and that's it. I don't require that they be played by method actors who are exploring what it's like to not be human. I don't require that they stick to (or avoid) any stereotypes that the game has built up around them. Although I do find many of those stereotypes boring, poorly concieved and generally kinda half-arsed, to be honest with you. And that's sufficient reason to jettison those stereotypes and either not use that race, or use it differently. I like lots of races, and I like unusual races. Because to me, that means color, flavor and variety. It means fun.