So, how would you configure the races as they stand.

TLDR
Alliance: all humans, Thalassians, Dwarves, Gnomes
Horde: all Orcs, Trolls, Tauren, Goblins (incl Vulpera)
Undead: of every race, Ebon Blade, Vampires,
Kaldorei: Night elves, Nightborne, Worgen, Naga
Eredar: Draenei, Lightforged, Man'ari, Broken
Pandaren: Pandaren, Mogu, Jinyu, Hozen


These are the 6 major world brackets divided amongst natural lines based on history, type, culture, experience, this is how they fit. If I were to do racial expansion, i'll collapse all the playable races into one of these 6 groups and have 6 epic campaigns involving their members.

I'll be frank:

1. Tauren fit with the horde. 100%, they are definitely more peaceful from the orcs, but that's not to say they don't fit. They were introduced as friends of the orcs and have a very similar culture / level of development.

2. Night elves don't fit the alliance nor do they fit the horde, they were designed to be a faction of their own entirely, ranging from advanced magical civilisation to near primitive savagery complete with full history, culture, great wars etc. within the context of their story which doesn’t fit either faction - their civilisation isn’t like the humans and their savagery isn’t like the orcs at all - both their magic civilization and savagery have their own unique concept and setting that doesn’t belong in either alliance or horde world. They are closer to the alliance on morality and civilization but they don’t fit at all.

3. The undead while derived from humanities zombie apocalypse do not fit the traditional alliance or horde at all either they, like the night elves seem to have their own world, they have a complete vibe, theme and a colossal biological altering shift after an epic event that introduces a new state, both politically, and biologically. full range of units, but faction designed to be big and their own thing. They don’t fit in with the horde or alliance. Theirs is not lone wolf underdogs fighting to rediscover lost honour or pride, they have a dark intent and purpose and an ambition resolute to care for nothing but it’s own ends.

4. Blood elves fit the alliance based on how they were introduced and fit with the humans they were designed in mind. Their story and history is very human intertwined, values and culture/civilziation also similar - it is removed from the night elven one, and what they have whether humans learned from blood elves or not, has a similarity.

N.B. However, just like alterac humans could join the horde, so could the blood elves. We will never fit, but we can be in it as our own faction of high elves continuing our fight for survival. Similar can be said for Night elves and Undead within the context of their own stories. Thing is NElves and undead were designed to be factions, not just a side race. While other groups were actually designed just to be races. But new additions haven’t always fit the theme of their factions well either.

5. Worgen
Pandas
Draenei
Nightborne

Don’t really fit their factions either. Pandas and Draenei make better sense as their own factions needing to be expanded. Worgen really fit with the primitive side of the night elves and nightborne with the magical advanced side of the night elves.

6. Of the remainder:
Vulpera
Zandalari
Highmountain
Mag’har

They fit very well with the horde

While
Kul’Tiran
Mechagnomes

Fit very well with the alliance, though void elves a SD dark irons feel like enemy versions of the friendlier halves of their species that have been reconciled with their former enemies. This makes them not quite as good fits as the first two.

Meanwhile Lightforged just don’t fit, and I maintain fit as their own Draenei/Eredar faction.

7. Trolls. Trolls are big enough to be their own faction without a doubt, however, they fit very well with the horde, similar cultural themes etc

My Faction System That would work.

1. Alliance:
Humans, Dwarves, Gnomes, Thalassians - 3 force tug of war, between human nations, Thalassians and dwarves. And no, not every human nation likes each other, same with elves and dwarves. High elves and blood elves have philosophical and ideological differences, void elves aren't trusted/welcome neaer the sunwell because of the nature of the void


2. Horde:
Orcs, Tauren, Trolls, Goblins

Goblins, like gnomes in the alliance, aren't fussed about all the factions and loyalties. While allied, Orcs and Trolls are in the tug of war, but it's not made simple by the complexity in the various troll groups. Tauren are often the peacekeepers between the two, their formidable and imposing physique make thier presence unheard of.

3. The Forsaken:
Undead, Ebon blade, vampires They aren't allies, but they're often find themselves fighting alongside each other and are often attacked on sight by the other races. It's a good thing they are formidable. They're not all evil, many within them actually have very noble goals - like defeating the scourge Lich King or the old god, but other factions barely take the time to find out if one of these is friend or foe.

4. The Night World
Night elves, Nightborne, Worgen and all things related to the kaldorei past and present - this means lots of contact with naga, illidari, satyr too

5. The Eredar
Draenei, Eredar, Lightforged, Broken - blizzard would need to expand these, but they really are entirely their own group and world

6. The Pandaren
Pandaren, Mogu, Hozen, Jinyu etc that world.