Since Friday's AD&D game (my first in over 20 yrs.) I've been thinking about racial limits to class and levels. When later editions came out, I remember thinking cool, they got rid of that. It never made any sense. Now, looking back, I think it made sense from a certain perspective. After getting back into the literary roots of the game, and reading a bit about where certain aspects of the game came from, I think I get and appreciate the class and level limits a bit better.
Basically, the bottom line reason, is that Gygax wanted humans to be the predominant race, and the other races were somehow lesser. Also, even though they looked human, they were different creatures. Elves weren't humans with pointy ears. They were physiologically, and more importantly, mentally different than humans. Hell, they didn't even have a soul. They were a part of nature/faerie world. The physical similarities didn't make up for the fundamental differences in the way their brains were wired.
I think one of the reasons that the limits were excised was that it is not politically correct to say that someone is inferior to another in certain ways. It leads to all sorts of accusations of racism and hate crimes. So as not to engender that, and to recover from the early bad rep of D&D as satanic, all aspects of that were wiped out.
Also, players wanted the ability to make their elves Uber, goddamnit, and why do the rules say we can't? In all the novels I've read they are Uber. I wanna be Uber! Whhaaaa!! Coming from a different literary background latter-day gamers didn't recognize the base of where D&D came from, me included.
For example, personally speaking, I cannot do higher forms of math--as in anything beyond pre-algebra. My mind is not wired for it. No matter how much I was taught, over and over, I never grasped it in the slightest. I could memorize steps to do basic pre-algebra equations, but I really had no understanding of what I was doing. On the other hand, in areas like reading comprehension and analysis, I test very high. It's a breeze. My brain is just wired that way. Within the human race we have very wide degrees of separation between people. Though it's politically incorrect to say so, not everyone is created equally. But within the human race, there are measurable norms and variations from that norm.
Now imagine an entirely different race of beings, which only superficially look human, but are as different from you or I both spiritually and mentally as we are from kangaroos, but who are highly evolved and very intelligent, and are able to communicate with us verbally. That's what gnomes, dwarves, elves, and halflings are.
With that in mind it is completely understandable that they would have racial level and class limits. Their minds can only mimic the human world's classes and abilities to a certain extent, the extent to which their brains are wired for it.
On the flip-side, something which was not explored but would have been cool if it had been, what are the classes that the demi-humans are naturally wired for? What spells or spell-like magical abilities would they have had? What inherent racial traits, other than ones in the context of a human-centric point of view or the ones useful for adventuring, would they possess?
It's interesting to think about.