Point is not to have more races, but have varying enemy factions that would be in opposition to the player. Game doesn’t really has to have all canonical fantasy races if what we have accomplishes these goals. By not shoving “racial diversity” and by trying to keep their design somewhat realistic – as well true to the real medieval time period they aim at – they have managed to create a unique feeling of the world. At least I get that impression. How they handled enemies is part of this. Another is restricting the use of magic. It’s quite rare so far and I like it that way. Mages and magic became so commonplace in other fantasy universes that not having magic users spamming spells left and right is quite refreshing.
I would say they can add more atmosphere/tactics/replayability by introducing more enemy types/weapons within already existing factions (which is already planned). We don’t need dwarves or elves. They’d either end up being token races (which would ultimately result in having low variety units/weapons/armors, etc. within their ranks) or soak resources that could be used to expand the already existing factions. By the way I love how undead are done in this game: their weapons and armors give them a lot of personality, even when all are skeletons who share an identical model. Zombies have even more personal touch due to their unique faces and the fact they are using an actually degraded human equipment.