The races module is a way to represent sci-fi and fantasy races of the characters of your world. If your world just has cyborg-gnomes, you can disable the module.
In a typical fantasy setting, you might have Elves, Hobbits, Dragons and Humans as humans. You can go into detail and create child-races to elves, for example wood elves, whose parent race would be elf.
Issues with the name
Kanka is aware of the issue with the module’s name. The community has been asked a few times about changing the module’s name to a less charged term, but no consensus has ever been reached. Kanka’s policy is now to follow along with whatever new term Hasbro chooses for D&D.
Changing the entity type
If you’ve created many creatures but meant to create races instead, you can easily bulk change their entity type.