The game has a lot of subtext that isn't clearly spelled out for the player. Examples, the implication that humans, elves, dwarves, etc evolved from a common ancestor in similar natural conditions as prevail in our own universe, and that the sterile relations between them are a result of the same biological barriers that prevent procreation between homo sapiens and near human relatives like chimpanzees. That being the case, to someone like Thaos, relations between these species must necessarily go the way of homo sapiens and Neanderthals, with each sapient species trying to wipe the others out to become the dominant race on the continent.
Creating a religion that maintains that races like Orlans are the intentioned creations of Galawain (who is allied to Magran, etc) or bringing elves and humans together in the Aedyr Empire under the watchful eye of Woedica, helps organize intelligent species into a web of obligations that allows them to create a shared society despite the absence of extended blood and kin ties.
If you look at a lot of the instances of conflict in the game, you can see many of them are driven by race. For example, the Glanfath tribal rivalries are *mostly* characterized by tensions between the older elves that began the culture, the newer Orlans, and humans, etc.