On Atlantasia you will NEVER find a half-breed elf (if a female elf was ever raped by another race she would commit suicide).
Which I think is probably something that didn't even need to be said. If you don't want Half-Elves in your game… just don't have them. There are no half dog-cats or monkey-horses so if you say these races can't interbreed, there it is. Easy. On the surface this just seems like an insensitive statement that deserves criticism.
But why would the author feel the need to put something like that in his game? Why word it like that? Well, it seems that this isn't an original idea - it actually comes out of Tolkien's Middle-earth:
The Elves view the sexual act as extremely special and intimate, for it leads to the conception and birth of children. Extra-marital and premarital sex are unthinkable, adultery is also unheard of and fidelity between spouses is absolute. Yet separation during pregnancy or during the early years of parenthood (caused by war, for example) is so grievous to the couple that they prefer to have children in peaceful times. Living Elves cannot be raped or forced to have sex; before that they will lose the will to endure and go to Mandos. [Judge of the Dead and the Master of Doom]
So they just die.
I'm not sure if the author of Atlantasia misinterpreted Tolkien, or if he just has a different idea about how things should work… but the result is pretty much the same. And if you have problems with one I think you'll have problems with the other. If you have issues with the concept (as opposed to the wording) then the issue is really with Tolkien.
Now personally I think the entire topic is one that I'd have been omitted altogether in the interest of make the game as fun for as many people as possible. But it does suggest something else about the way most fantasy media seems to have lost sight of the very alien nature of things like Elves in a Fantasy setting.
In Tolkien the Elves were not human, and you see this reflected more in the early years of RPGs with Tolkien inspired elves in them. But in the 30+ years since they've been increasingly humanized (much like Vampires). Now they are just people with pointy ears (and Vampires are people who sparkle) and they're written and played more or less like any other human character.
A lot of Elf characters in current media could lose the pointy ear prosthetics and just be a person. There's really very little that makes them feel that different.
The otherworldly inhuman nature of Elves and other magical creatures is something you see throughout folklore. Here's an old Irish Fairy Tale about a mermaid (not the half-fish kind, this is basically an Elf that lives in the water):
One spring morning, fisherman Patrick Gannon stood upon the seashore as the sun rose. "Lovely morning," he sighed to himself. He puffed on his pipe, for nothing could bother Patrick this day.
Except one thing. He wished he could share his pleasure with a wife.
"Ah, a wife would be fine on such a morning," he sighed again. Just then, he spied a rock upon the shore, upon which sat a beautiful young woman, combing her sea-green hair.
Patrick looked down at the sand. He knew this was a mermaid, a sea fairy. Beside the maiden sat a red cap with a feather - a magic cap, that is, the sort the mermaids wear to find their way home beneath the sea.
Patrick ambled down the shore toward the rock. "Hello," he said, startling the mermaid. "Don't be afraid," he said. "I came only to say how pretty you look this morning."
When she blushed and looked away for a moment, Patrick grabbed her cap.
"What do you want?" the mermaid asked.
"Mermaid," Patrick said, "I want to marry you." The mermaid accepted.
So Patrick put her cap into his pocket, for a mermaid will lose her memory without her feathered cap.
Now Patrick and the maiden returned to Patrick's cottage. They had three children, and no one was happier than Patrick Gannon. However, one day he forgot to hang up his fishing nets.
Mrs. Gannon was cleaning that morning, and she spied the fishing nets that Patrick had not put away. When she lifted them, she found a hole in the wall, and in that hole she found her red cap.
The moment she found it, she put it on, and she remembered her father and mother and longed to see them. She walked out the door, turning once to blow a kiss to her sleeping children. She walked to the shore and dove into the sea.
So Patrick lost his beloved mermaid. Every day he walked to the shore, hoping that his wife would return, but she never did. Still, he never forgot her, for he knew that she had truly loved him.The Elf in this story is not human and acts in an inhuman way - just like Tolkien's elves. Real people don't lose their memory when you take their magic hat, or walk away from their own children when they get their magic hat back. Humans have more compassion than that. They don't lose the will to live when faced with tragedy either. What makes humans human is that they're stronger than that.
Perhaps part of the problem is we've gotten so used to characters who are alien on the outside but human on the inside that we've forgotten about ones who are the other way around? Or who have an alien exterior as a visual symbol that they are not human and think and act in not human ways. When we take story elements and ideas from older media (like Tolkien) this is where we run into problems with confusion about how humans are depicted and how non-humans are intended to contrast with that.
Maybe we've had too many pointy eared humans in our media and not enough Elves?