Here's an idea I might actually use at some point:
The world is a human world with mostly ordinary animals and plants. The Reincarnate spell, complete with random result table, exists; there are also geographical locations where the dead can potentially reincarnate naturally, even en masse. This is the source of all demi-humans, humanoids, and monsters; there is no elven civilization or dwarven kingdom, just individuals created by magic.
It's sort of a variation of the pool of endless serpents.