Because I am in many ways an unfrozen caveman dice-chucker myself, I have missed most of the tropes surrounding elves, dwarves and hobbits, er, halflings that seemed to have developed and ossified over the last thirty years.
Despite the protestations of E. G. G., all of these demihumans are informed by Lord of the Rings. Tolkien created halflings, period. Getting them out of the shadow of LotR may be impossible or even against copyrights.
Tolkien's elves are wonderfully tragic heroes fighting the Long Defeat until they all finally go "across the sea." They are also immortal and nearly divine (they used to hang out with Gods in the Old Country). It is hard not to like Tolkiens's elves. However, these majestic beings were seriously cut down in aspect to fit into D&D. All too often, they come of as xenophobic snobs with Attention Deficit Disorder. Or worse, magic-fueled hippies.
And what of dwarves? Mechanically, dwarves are tanks perfect for front-line melee. But their racial traits seem to involve either greed or melancholy or drunken bloodlust. I find this to be pretty thin gruel. I understand that dwarves are, in many modern systems, seen as a dying race long past its glory (more Tolkien, I suspect).
In the eighties, TSR published Gazetteers that covered each of these races. The coverage of Alfheim and Rockhome was engaging. The book about the Five Shires was not.
In my D&D world, all of these races are in full flower. Individuals differ greatly in temperament, but elves, dwarves and hobbits are greatly outnumbered by humans. I imagine that these demi-humans would be a rare sight in some human societies.
That many OSR bloggers evince disdain for elves and hobbits surprises me. Elves, in D&D, are both fighters and magic-users. These dudes are tough-cookies. Forget the Drow (and certainly do forget those awful Shadow Elves), there are millions of reasons why normal elves would want to stomp on humans, dwarves and hobbits. Only by making Elves "world-weary" can the "elf-pocalypse" be averted.
Dwarves, seemingly designed to be belligerent warmongers, can't seem to figure out if they want to crush skulls or mine more gold. The greed trope is overplayed. Let's look back to folklore to return a little more fay to these fairy creatures. More svartalf, please. (Yes, I know that means "dark elf", but then is Gandalf wasn't an elf either.)
And hobbits. What does one do with hobbits. Make them pirates? Make them fat, parochial layabouts? Make them cute Ewoks, as Dragonlance tried to? Let's all just dump them from the fantasy world. What would change without them? At least, ban hobbit PCs.
A bit outside of the concern of D&D are gnomes. Gnomes, my unfrozen caveman mind tells me, were magical little dudes best suited to be magic-users in AD&D 1e. What the heck did you kids do to them while I was away? Now they seem to be idiot tinkers who make joke magic devices. The Rockhome Gazetteer tried to put that crap on Dwarves. Glad to see it didn't stick.
Gnomes would be fine as nature-dwelling, pipe-smoking mages who shy away from combat. No need for your Dungeon Bastard rage.