The fallacy of populating a world with "real people" races is that they are just humans with cosmetic differences, so why even bother having other races?
I don't think it's a fallacy to assign traditions, customs, laws and sense of what is worthy and unworthy to a culture, and derive behaviour from that instead of from merely an idea of what opponents I need to give the PCs.
That's what I call "real people".
It has nothing to do with humans. It has nothing to do with them being playable races. It has everything to do with making suspension of disbelief easier and reinforcing the idea that morals are relative.
If the only thing I need is a plot device, then I create a plot device, not a culture.
It is not limited to races either. Individuals, groups, religions, cults, secret cabals, guilds, you name it. All social constructs can be made "real" by anchoring their behaviour in environment, history, emotions and beliefs.
Additionally, all GMs are human (as far as I know, at least). Their creations are limited by what they can comprehend and accept as globally consistent. As such, everything we create - races, settings, characters - is based on our own limitations as humans.
I won't even go into the "kissing a slug is no fun" trope, even if there is a grain of truth to it - the more human-like races are, the more meaningful social interactions they can have with one another, and this is a core part of character creation (RPGs being, essentially, social games).