There are six races in Terah and three of them didn’t even start on the planet. Obviously, the GM can decide to include other races and it’s always possible that in a world with so much left to explore, other races might be discovered in the future. But for now the intent is to closely follow the Victorian Age on Earth, which only had one race involved.
The two races that started at the beginning on Terah (Humans and Dwarves) developed in totally different areas. This represents the meeting of “civilized” versus “primitive” on Earth. While both sides were of nearly the same technological level and actually had very similar religions (unlike on our own planet), the culture shock and paranoia exhibited between the two accurately reflects our own world’s response.
Vykati came about suddenly on Terah, although even they aren’t sure how. They represent the foreign element of the Victorian Age. Travel had suddenly become much easier in the mid to late 1800s and with that came even greater access to immigration. The result, even in areas whose population basically consisted of purely immigrants, was a growing distrust and exploitation of the newcomers.
The two main races from the other world, the two elven races, are used to parallel the conflict between democracy and socialism. In the most pure sense, both were an attempt to do what was thought best for the population. The leaders of the two movements in both the real and fantastic versions of this conflict most likely had extra things on their agenda, but the base philosophies in their most altruistic form had the best for society at heart.
The final race, the gnomes, have no real parallel in our world. They were added for the fun of it.