All the demihumans (elves, dwarves, demons, etc) are basically humans who's been exposed to raw mana but didn't lose sanity (those who lost sanity basically turn into mindless monsters like goblins and such)
Though this happened loooooooooooooooooooong in the past, the current human countries have forgotten such truth and many are 'human supremacists' (ironically, there's basically 0 'pure human' anymore after their history of having sex with any and everything, in fact the main character is an atavist to her elf ancestor)