In the real world we have discovered (so far) precisely one sapient species on the planet1. There is evidence that one or more subspecies or races of that species2 may have coexisted at some points whilst they were more-or less sapient, but that's still a number of sapient species that can easily be counted on the fingers of one hand.
Most fantasy settings have … rather more. Besides the standard fantasy "races" there will usually be at least one type of orc, at least one type of reptilian humanoid and various beastmen. All too often fantasy writers will fill an ecological niche with a new species rather than a new culture and this quickly leads to a vast proliferation of different sapient species.
That's where "race inflation" comes in … sooner or later every splatbook introduces two or three new species with a stat block slightly different to the ones that came before and frequently some kewl new power to "justify" their inclusion. If the GM is really unlucky they'll be statted for use as PCs as well.
Beastmen species are particularly prone to this as it's very easy for a lazy writer to simply take a human body, drop a regionally appropriate animal head onto it and cut and paste in a culture.
All too often inflationary races will bring with them their own deities and some weapons and gadgets that either unbalance play or don't vary significantly from those already introduced.
Worse still, when faced with an actual race of a pre-existing species (i.e. a sub-group varying only by phenotype), this race then all too often gets stat variations similar to those for a new species … the only exception being humans, where the values dissonance of providing variable stats for different human races would be a bit too obvious. In more egregious examples - especially where orcs are involved - the races in question may well be colour coded for your convenience.
Somewhat subverted in Sci-fi since it's not inappropriate for there to be an independantly evolved sapient species on any given habitable planet, but on the other hand it's not inappropriate for there not to be.
Can also be justified in a fantasy setting if a given species turns out to be the result of magical crossbreeding or something, but rarely to the degree that it occurs in most settings.
Game and Story Use
- When creating settings: K.I.S.S! You don't need to cook up yet another species to lurk in your deserts - when the temptation grips you, try getting one of your existing species, issuing burnooses and camels and making the difference cultural rather than biological.
- That said, all these assorted species may actually explain things like the fact that everyone in the setting uses "Common" as a language: with several hundred "racial" languages, everyone gave up and settled on one common tongue.
- Given the record of the one sapient species we are aware of in relations between its various races, a suitably dark fantasy campaign could be based around the steady progress of a setting towards being a single species planet.
- In a sillier campaign, introduce an overactive deity or quasi-deity wizard who frequently turns out new hybrid species: "Ratmen? Done! Wolfmen? Done! Lionmen? Done! And that's the Sheepmen done so … <looks around the petting zoo for inspiration> … Guineapig men anyone? Beavers? Stoats?"
- In a sci-fi setting, the genocide of one or more competing sapient species might be an interesting backstory for one of the key powers. It may not even been common knowledge, but visitors to one of their "home colonies" may find archaeological evidence of prior settlement.