1) What purpose do multiple races have in a rpg? Or alternatively, what should multiple races add to a game if they're done well?
They're a wonderful filter for GMs and Players alike. Like LL said, they allow you to be an other... to try for a whole different perspective with good justification (Say living hundreds of years etc). They also allow a GM to explore adapting real world historical cultures and experimenting with them with less risk of blow back or offense. You want to ideals and cultural values akin to Ancient Koreans and layer on Scottish Overtones for your dwarves, rock on. File the serial numbers off and put a beard on it.
2) Do you prefer multiple races at all in your rpgs?
Yes. Now that I think on it, I do. Human only fantasy settings for RPGs tend to make me think something wonderful is missing. Maybe it was too much High/Epic Fantasy as a kid but I find a world where humanity has no other peoples nearby a bit sadder. Then again I use games for escape and fantasy folk help.
3) What fantasy race pet peeves do you have? Why?
Sometimes they seem too isolated and inconsequential. The "This is Elf land where the elves come from".. and I'm like "what? just.. one nation? Did the elves have no explorers? No pioneers? Are humans the only culture that ever fractures due to politics, religious views, or whatever? And they're often down powered. "Dwarves are the best smiths in the world and make the finest armor and weapons" and.. they get THESE mountains and maybe send out smiths. Why the hell aren't the dwarves a major economic juggernaut or military power with that sort of thing established? Why does their kingdom only seem to exist as important when a great dark is going, when frankly human kingdoms should be currying their favor, considering them rivals, or the like? Just as an example
4) How many is too many? Too few?
I think I prefer it cap at about 5 or 6 major 'playable' races , otherwise it can feel too crowded but I've seen some settings and GMs pull it off well with as many as twenty. I'd like at LEAST 2 thanks
5) What do races represent in you games if anything?
Depends on the setting to a large degree.