I think racism in fantasy gaming is unavoidable, and I can't talk about why without explaining my perspective.
I'm American. In my culture, racism isn't just the presence of racial stereotypes on others; it's also the lack of racial stereotypes on the majority. For example, if a black person is angry, then that is because they are black and all black people are angry; but if a white person is angry, then that is an individual character trait which has no relationship to their race. A rich Jewish person is rich because of their Jewishness while a rich WASP is rich because of skill and bootstrapping; an Asian honor student is smart because of their race, while a white honor student is smart because of individual merit.
That lack of racialization applied to the majority is a part of racism that I think is invisible to most members of the majority, and I think that invisibility makes it very difficult to confront. To use D&D as an example, it's not just racist that elves have a specific set of racial traits applied to them, it's also racist in a supremacist way that humans--the majority race, the ones free of racialization--have completely customizable traits to pick from. Elves can only ever be good at what elves do, but humans can be just as good as elves at what they do, or what dwarves do, or what orcs do, or or or.
The reason I think racism is unavoidable in RPGs is because when you declare a race to be not human, you have to define what separates them from humanity; and if you're a good game designer, that definition has to include mechanical benefits that support the definition you create. The problem is that this same standard is never applied to humanity. Human characters are never defined: there is nothing a human can't be, can't do, can't have experienced. Humans are individuals, who have varied and individual experiences. Other races, by the nature of not being human, are a collective who are incapable of existing outside of that definition of not-human.
As you're reading this, perhaps you're thinking to yourself that I'm overlooking an obvious possibility here: that it is absolutely possible for writers to apply the same level of racialization to humans as they do to non-human races, to define what humans can be and therefore what humans cannot be. And yeah, sure, that's technically possible, but I've never seen anyone do it yet. Maybe I'm just reading the wrong RPGs.