Waves of scepticism about the standard fantasy notion of 'racial languages' - i.e. languages tied to a particular race - have been building and crashing. Having one language per region, instead of one language for all dwarves, seems much more sensible. And how could all the dwarves in the world speak 'dwarvish'? Shouldn't there be many dwarven languages? But I don't think these objections work.

Different Walks of Life

I have a heavy suspicion that people who think that languages divided across racial lines look ridiculous have fallen afoul of mixing 'fantasy races', and 'human races'. Thinking of human 'races' as having in-built languages would, of course, look ridiculous. But a 'fantasy races', has about the same relationship to 'human races' as 'gorge' (the depression in the ground) and 'gorge' (meaning to eat too much). They have a clear connection, but they're not the same thing. A fantasy race is quite real (at least within the fiction of the fantasy world), and this real division entails living separately from the other races.

Consider an anthropologist-gnome who went to live with some elves. According to D&D cannon, elves are not pained by natural temperature deviations, so they can sleep comfortably in snow. There's a good chance they won't light a fire, even during a blizzard! So our half-frozen gnome might try to live with some humans instead; and would find them living with horses and cattle - giant creatures, all of them! The door-handles would be too high for him, and the privies might be wide enough for him to fall inside.

Just as badgers and ravens wouldn't live together comfortably, the various fantasy races have clear reasons to live apart. The barriers aren't insurmountable - if people can live with children, they could probably make provisions for gnomes - but the various problems provide at least a reason to default to living apart.

No More Languages!

We have a more cutting objection to the 'racial languages' objection: humans have many languages, so elves should also have many languages. And I have to reject this one, in two different directions. Inside the game-world, I say 'yes, in other lands, far away, elves have other languages, and we only say "Elvish" because this is what the local elves speak'. And outside the game-world, I say 'there's no bloody way I'm expanding this to 100 languages per race, you absolute maniac'.

The Ravenloft Campaign world attempted a realistic language division. The map had many different countries, which the PCs could journey across, and each one had its own language. Of course, when I actually ran my game according to the book, no adventuring of any kind could take place, because the PCs couldn't speak to anyone. A little miming and pointing might get them somewhere to sleep, and something to drink (if they had coin), but plot hooks? No. Nobody could explain a quest beyond miming a monster and doing a 'stabby-stabby' motion.

Monoglots with Opinions

I'd also say that most people are not prepared to deal with the realistic simulation of multiple languages in a game. Monoglots have no idea of the oddities, and fuzzy divisions between them, and don't know what they're getting themselves in for.

I have read people's ideas on fantasy langauges. The Drow language which floated around the early web was a pointless parody of German with a bucket of apostrophes dumped on top. I have seen the glossaries with random halfling words for 'spoon' or whatever. I've read enough to stop reading. It's unimaginative crap, and only two exceptions come to mind.

1. Arnold's posts on dwarven gender are positively joyful.
2. Tolkien.

Synthesis

So, all-in-all, dividing languages according to where people can visit seems sensible enough, and saves the game-world from quest-cancelling changes. But despite all this, as I was penning my own game-bearing world (Fenestra), I couldn't resist playing with the languages. In the earlier example of the anthropologist gnome, I never mentioned dwarves; gnomes could probably visit dwarves quite happily. So I've written the two as mostly-mutually-intelligible.

And if the gnomish language can infect dwarves, it seemed reasonable to make it a default trading language, so humans speak a variant as well. Fenestra paints Gnomish as intelligible to...Mannish? Humanish?...but their trading language is not mutually intelligible with Dwarvish, because language is weird.

Then I broke my own rules again. The Missions in Maitavale campaign book has a faction of bandits, lead by foreign nobles. They get their own language to scheme and plot with, and to provide clues about who's doing what.

Of course, I'm breaking my own rules - this definitely stands a chance of confusing a few readers! But if it feels wrong, then people can just ignore those little linguistic footnotes, and interpret any other languages as 'just a thick accent'.