Apparantly only three SD created races, but potentially unlimited when you consider the fact that we will be able to mod our own races and share them with other users with ease. I'm already thinking about which race I will make first.

The sentient ones probably have some degree of control over non sentient beasts, thus creating one unified faction.

Brad stated on another site that there are 2 Races but 12 playable factions among those races.  Each faction will have it's own unique tech tree and spellbook.

I assume the major reason why only 2 races playable is just to save time in developer costs.  There's probably a lot of modeling that needs to go on for a playable race (as opposed to just a regular unit).  Plus, I suspect you'll "build" your unit through adding equipment and features, and having a non-standard race-type would make adding clothing, weapons, etc. to that unit pretty tough, if it's like the ship designer in Gal Civ 2.

well, what exactly is a "race" ?   Human?   in the original Master of Magic there were like three human races,  High men, barbarians, and nomads.  

Now consider the idea that this game might bunch creatures of good into 1 race... so you have elves, dwarves, halflings, happy-kin, and bobble-heads as 1 race devided into 6 factions (yes bobble-heads are a good faction) then an "evil race"  of orcs, beastmen, klacken (or whatever bug race), lizardfolk, angry-kin, and poddles as the other race divided into 12 factions.   they would be the same race because the build order and general tech-trees would be the same, but each with their own variations and modifications to that build order and tech-tree.

Just in one of the interviews I think. Apparently the major groups of humans/fallen have been seperated for so long that they have developled unique cultures and personalities.