That's actually great. Sorta mysterious, clearly evil, morally easy to exterminate. Perfect. They're in.
Also, the limited number of races is entirely deliberate. I'm tired of worlds with several dozen playable races, or worlds with huge nations built around each race. Four is plenty, I think.
Dwarves are woodsy, backwater hunters and small-plot farmers, but are culturally closely related to humans, to the point that there's little distinction beyond that of socioeconomic class.
Gnomes are enslaved in three of the four nations, and are considered to be full people with full rights in the Vallheim. They also are on good terms with the dwarves.
Humans are as diverse as every other race, and form the power structures of the four nations.
Goliaths have a society very different from the others, are are normally branded as savage. They send out bands of Urgal warriors to earn glory and cool stuff from the other tribes and from human and gnome settlements.
I really feel like adding more races would contribute more to pidgeon-holeing the existing races than it would help. With a limited number of races, two of which have serious RP drawbacks, everyone has room to expand, "like an ideal gas filling its container
". If we add more playable races, then each race will crowd down into smaller roles to make room for everyone else. If you think it would have a different effect, please let me know. Discussion is the foreplay of epiphanies. Or something