Ah, but widespread illiteracy means there can be no progress. Humanity can copy the past, but, without the written word, the copies are made by rough description and experimentation. Inferior at best, stick figure parodies that corrupt the very memory of the object they ape at worst. A story can be passed from generation to generation, the science necessary to create a marvel like the large hadron collider cannot. Even the pyramids of egypt required calculations done on papyrus. The end of writing is the end of math, the end of math is the end of society. Taking the ability to read away from people... That debases humanity on a level that a nuclear strike never could. It's a very depressing setting.
Magic in a setting, of any kind, lends a sense of wonder. Neonazis in Philadelphia and Jesus in St. Louis are interesting, but, at the end of the day, you're still just stoving in a guy's head with a pipe. It could be fun, but I couldn't get into it because humanity would be too screwed to recover. The setting kills it for me, because there is no hope for humanity, no room for change.
As for the inhuman races in D&D, they add to a narrative. The fact that a person is grey elf/sea orc isn't that inherently interesting, it's a bunch of random words mangled together, it's about the story of how that union came about. It's about the culture of the gray elves, sea orcs, and whatnot. Fantasy settings are, often, about the examination of very specific aspects of humanity, highlighted and purified. For me, the things aren't the big draw, it's about the stories in things. Regular bolas are cool and effective, but what about bolas made from three severed heads tied together by their ponytails that scream and bite when thrown? Even cooler. Now, better even than that, there's going to be a story behind the severed head bolas that there never will be in a mundane object. Even if I never learn the story, I still know it's there.
In short, I like the story above all else (see damp potato sex analogy on my last post), and I can only see one ending to a story where humanity loses the ability to write. Atavism is just too depressing a way to go.