That's kind of the problem with it was it was mechanically implementing something that was more setting/background cosmetics specific in the first place. Not all settings think dwarves should have a harder time becoming a wizard. Forgotten Realms, the modern "default" for D&D thinks anyone can do anything if they want, classes are just "jobs" available to anyone. Those settings that do care, including throwback settings, generally make it a story telling device about why things are the way they are ("dwarves are closer to the earth and have a hard time learning illusions") and the hardships exceptions face ("it took a lot more work and they lost access to some of their home community") and making it a mechanical disadvantage doesn't do anything more interesting than the storytelling tools already inherent in the setting.
The problem is that some racial bonuses are things that can be plausibly explained away by background (stat bonuses, mental abilities, humans getting a feat) but a lot aren't (aarakocra flight, dragonborn breath weapons, halflings being able to hide more easily), and they're all balanced against each other. Does an aarakocra raised by humans get human bonuses, and still get to fly? Does a human raised by aarakocra lose their human bonuses but grow wings?
That's almost exactly the split they made actually, with things like feats and flight still species based, but statu bonuses and backgrounds (with maybe some small exceptions) not being species based.
They did some work to balance it, but really species have never been the biggest balance issue, it's always been class stuff, or magical vs. martial issues, or the fact that ranger is thematically cool if you like LOTR, but sucks mechanically compared to other classes.
These changes were a part of the 2024 edition of the Player's Handbook (PHB) and Dungeon Master's Guide (DMG), both now published, with more of it to come in other updated books. (Or "5.2E" if you prefer the simple decimal point of the 2024 updated Systems Reference Document [SRD] over "5E (2024)".)
You're conflating physical properties with other abilities/characteristics. Does a dwarf have a physical limitation preventing them from wielding magic? This is the argument.
I don't see anything innately wrong with a human who can breathe fire, or has wings, or a dwarf with four arms, so long as you're willing to RP it. It does seem silly to say that no, it's actually against the rules, your dwarf can't learn magic.
There are different versions of D&D. At least in some versions, you have some control over assigning some of the stats, and so you could assign some of them as you wish if you want better bonuses for magic.
It shouldn't limit you from using magic, and it doesn't, and that is good.
But, sometimes you will want to do things other than just casting spells (especially if you have run out of spells or if there is anti-magic preventing casting spells), so you can decide if you want to be good at one thing, or good at other things too but perhaps not as much.
That's actually a really good question. It's certainly one of the key debated questions at the heart of what WotC is doing here (and as others point out, somewhat lagging the rest of the TTRPG industry, many of which got bored of "races" in the D&D mechanical sense a long time, in one way or another).
Are they archetypes for builds? Why are they archetypes for builds? Is it problematic if they are archetypes for builds? Are they just flavor for settings and character backgrounds and other storytelling needs? Should they be? Why have "races" at all and not just "backgrounds"?
