”...the dwarven clans were beaten and retreated to their holdfasts deep within the earth. The elves withdrew into their vast and ancient forest, abandoning all to the Shadow. Man was left alone.” - Morrus the Green Chapter 3
Dwarves, Elves (Including Eladrin) and Devas will not be player races. All other races from the PHB and PHB2 are playable. Some specific notes about particular races are given below as flavour and do not affect mechanics. Much to the delight of the Dark Lord, humans generally have a dislike of elves and dwarves as a long standing of emnity grew out of their abandonment. Elves and Dwarves are outlawed and sightings of them are immediately reported and hunted by the Cult of Shadow.
These were born long ago in an attempt to turn the tide in the great final war against evil. Since then they have matured and become a people unto their own. They were branded as outlaws and once hunted almost to extinction by the Dark Lord. Now that they are no longer a threat, they are allowed to co-exist and some are even indoctrinated into the Cult of Shadow and used for their innate martial prowess.
Halflings are heavily subjugated and are a slave race. They are put to use building roads and constructing temples to the Dark Lord. Some Halflings are privately owned by powerful landowners. It is very unlikely that any free Halflings exist and any encounted are simply run-aways to be dealt with accordingly.
Tieflings make up the majority of the noble houses. They are merchants and landowners having made deals with the Dark Lord somewhere in their past. Good Tieflings do exist and are usually intelligent enough to resist the Shadow from fighting from within.
Shifters are generally are a nomadic and barbaric race. These people move from place to place in small packs. Long ago, the Dark Lord splintered many of the larger clans and enslaved the rest. The ones allowed to exist are a shadow of their former glory.