This will likely be brief, but once I get rolling . . . who knows?
Everybody that knows some basic D&D history knows that demihuman level caps were first introduced into the game as one of D&D's arbitrary balancing factors. Our game is much maligned for having several points of arbitrary balance, but this one is odd, to say the least. However, just this morning I think I may finally understand it. And it only took me 35 years.
First, the ironical portion: demihuman level limits are one of the things that D&D is regularly criticized for, by fans of the game, as well as the haters. Strangely, though, the players, the vocal ones, that hate it and speak/write/blog about hating it, also ignore it. It's one of those things like alignment languages. A person (I won't name names, you know who you are) will write a 10,000 word essay on the arbitrary and "silly" nature of such things, and in the last 50 words smugly declare that they never follow such rules anyway.
For years I, and the gaming circles I ran in, ignored level limits. We also ignored the rules for dual-classing and allowed humans to multiclass, but that's another post. I was never into the idea that being able to detect sloping passages and a bonus to certain saves was worth stunting my character's development. I mean, you're giving up a boatload of hit points (depending on exact flavor of D&D you play), spells and spell levels, better to-hit chances, and improved saving throws. That's a lot of stuff that will come up every single session, and it is sacrificed for some special abilities with a pretty narrow application. How is that "balance"?
This morning I realized I have been looking at it all wrong. It is not meant to balance demihumans against humans on a 1-to-1 basis. It is meant to balance entire populations. What is one of the things common to racial descriptions, no matter what setting or ruleset? The supposed rarity of dwarves, elves, whatever. Things like "The dwarves are rarely seen anymore, their numbers having been decimated by their centuries-old conflict with the goblins." or "The elves have been slowly and mysteriously disappearing for generations of men, their population now a shadow of its former numbers." From the beginning, demihumans were meant to be rare.
So, it is simple economics, really. If you want to control the flow of goods, you increase the price. A player would think twice about making his fighter a dwarf, if he knew the character couldn't go above 6th level. That alone would ensure the rarity of dwarven characters. And hobbits? Forget it. 4th level, are you kidding me?
But, there is another way. As much as I hate to say it (not because I'm an Edition Warrior, just because this is an OSR blog), 3E and up, including PF, figured it out. Rather than make it prohibitive to play demihumans, make it enticing to play humans. Instead of making humans the no-bonus-or-penalty baseline, give them some bonuses to make them attractive options alongside the demihumans.
Of course, this is a form of power creep, but if handled properly has its benefits. If the bonuses are kept slight in power, yet broad in application, and tied to specific human cultures/societies in the campaign, that should help. Things along the lines of humans from a certain region are Hardy, and gain a +1 to saving throws against the natural elements, ie freezing to death. Or another group that is known for their horse archers, so fighters have +1 to-hit with bows from horseback. I like mechanical ties to the setting, so minor perks like this are right up my alley.
Well, I didn't keep it as brief as I thought I would. I suppose I could have just said "Ignore them, it shouldn't break your game" and been done with it, but where's the blog in that?