I guess that there has been some confusion in the community about races and factions.
It's important to realize (if you're not in the beta, you may not realize this) that factions are not races. The Gilden and the Krax and the Capitar (in the game, these are factions) could all be best thought of as a country, or an ethnicity, of the race of Men. A faction is what you control in the game, it's your "empire." In your faction, you'll have an allegiance to the Kingdoms or the Empires (this basically determines whether you use life or death magic), and a default race.
There are six races that I know of in the game right now. They are as follows
- Men
- Dragons - not a playable race
- Urxen - basically a goblinoid race
- Magnars - a fallen race
- Trogs - a fallen race
- Wraiths - a fallen race
The current design calls for being able to conquer cities which may contain races not your own, and being able to build units of that race from them. A lot of people are worried about this, because in games like Age of Wonders, this meant all of a sudden you could access the uber-unit available to that race and gain a big advantage.
This is not a problem in Elemental because that's not how things work. We the players create the unit types available, and a Trog in plate mail might be a little taller and perhaps quicker than a Man in a suit of platemail, but they're still soldiers with the same equipment.
The city that the Trog live in may have a special property, like being able to build certain things faster, but it's still not a game-changing property, because it's limited to that city and the city comes with its own drawbacks.
One thing that's being looked at is whether to focus on working on the four fallen races, or to put more effort into allowing custom player races, or to collapse races down into the factions. Factions aren't going anywhere, and there will always be at least Men, Dragons, and Fallen, as far as I can tell.
The reason this is being looked at is because it may seem too complex to new players, which is fair.
I think so long as the design of the races is kept to specific qualities, and those qualities are not too dominant that they dominate the game, there is not a lot of confusion. Frogboy has a chart here:

That does present the factions in a pretty complex manner. But once the game begins, everything becomes quite simple: You have the Altar, the Capitar, the Tarth, the Gilden, the Amarians, and the Kraxis. They are factions, each with their special abilities. It is unimportant that they are descended from the Mancers or the Ironeers, or that some men crossed after the cataclysm. They are merely different enemies.
Some factions will have different races in them. If you conquer their cities, you will be able to produce a couple different looking units with stat variances. Normally this means conquering a Fallen City, or being Fallen and conquering a City of Man, and enslaving the populace.
Urxen vs Trogs
Part of this is why there is a need for Urxen and Trogs, and why they should be separate. I gather some art assets have been completed for the races, and that currently something cool happens with marrying members of the Fallen races - the genetics get shared and the offspring share facial characteristics.
What the discussion is really about is about might be summed up as the following two considerations: "The Faction of Resoln" is the only default Faction with the "Wraith" race. And there's this lopsided thing going on: none of the Kingdom Factions (which are all we can play right now in the Beta) currently are anything but Men, and four of the five Empire Factions are all unique races. This kind of leads to the thought that perhaps there ought to be only one "Fallen" race, broken into unique factions called the Umber (that's the Urxen), the Resoln (the wraiths) etc.
Of course no one is talking about removing the factions, but the future of the races is something being talked about. One thing getting some attention also is whether to allow custom races, and how much work to put into custom races.
I hope that really sums up the threads in the dev journals which can be confusing to people not in the Beta or just joining the converation now.