For the flavour of the different races (and of course a little bit more difficulty), I suggest that there should not only be certain things a race is good at, but also rather harsh limitations with what a race is really bad at or can't do at all. The less vanilla a race is playable the more it supports a unique playstyle.
For instance: yes, Kobolds can't create high tier metals and alloys - but that doesn't matter since they just need too farm it from invaders and smelt and forge it into anything they desire.
Would it be possible to restrict certain races ability to use certain metals at the forge etc at all? Or a certain percentage that the materials are lost during the process because (because humans or kobolds just can't correctly handle mithril or bifrost)
Being unable to make certain materials, and having poorer yields would be a way to differentiate them, certainly.
Why are orcs even able to grow crops? They do not sow 
Gnomes good with animals? I picture them as vegan naturephobic nerds which probably are allergic to animal fur. Also: farming is hard physical work; terrible harvest yields until they develop a technological level with industrialised agriculture.
They were made by other people, though granted, it is a little odd for gnomes to be
both super advanced and discount elves.
The orcs are also a conglomeration of of different fiction sources and cultural motifs as well (the Uruk caste is implied to be a hybrid of the mongols and Japanese for example.) Additionally, the game doesn't like it if a civ needs to eat and can't farm.
Dwarves and magic? Heresy. Let magma deal with such peculiarties.
The dwarves' magic is already fairly constrained with just four elemental wizards - with those wizards utility either being working in groups with similar wizards, or in tactical situations: Fire wizards to fight flame using enemies, air ones to fight webbers, water if you expect a lot of fighting along waterways and wet moats. Earth mages meanwhile serve as good shock troop type dudes relative to other dwarves, being bigger and more resiliant along with thier spells.
Comparatively speaking, the orcish dreamwalkers and warlocks had a much larger array of spells available to them, being more directly focused on debilitation of one's enemies.
Arcanii - Good guy equivalent of warlocks. Would probably be pretty heavy on DFhack though to have them make minions from normal materials instead of dead bodies. Poor endurance, lower average strength, and lacking disease resistance since they try to keep thier distance from such things. Can set up shop anywhere they can survive.
Hyborians - Mixture of vikings and native americans. More primitive than a lot of civs, but not kobold level primitive. Higher disease resistance, adeptness with bows, spears, and slings, maybe higher endurance. Live in forests and jungles. possibly hostile?
Wayfarers - Merchant gimmick humans as they are.
Duneriders - Mix of North Africa, Middle East, and a bit of the Indian Subcontinent. emphasis on fire and earth. Maybe make use of the sandshaping stuff from the tileset, and expanded glass types exclusive to them, and being able to make Fireglass, a steel-grade material made from sand and elemental fire. Higher endurance and agility perhaps. Deserts, badlands, and wastelands.
Frostwalkers - Inuits meets Slavs in flavor. basically the opposite of the Duneriders, making use of air and water magic, and making use of ice shaping and enchanted ice ala Skyrim's Stalhrim. Bigger than other humans, maybe a bit tougher. Tundras and taigas.
"Humans" - The generic humans. Utterly average in every area, neither excelling in a given field, nor being especially weak. They can live anywhere they can grow food, but compared to more specialized folk there's always someone better.
vs Dwarves: No access to super metals beyond steel for alloys and orichalcum as the usual smelting byproduct. Still badly affected by cave adaption.
vs Frostwalkers/Duneriders: Not as adept in the relavent magics, lacks the shaping techniques available to those two civs, forcing them to rely on traditional materials.
vs Wayfarers: Not constrained near as much by space and money hungry guilds and stalls (and consequently not as reliant on large supplies of silver or gold being locally available,) but also not able to pull from other civs for goodies/special stuff and while able to make building materials more efficiently than dwarves, the Wayfarers are yet more efficient than them.
Addendum here: They share a similar set of basic goods shops to make sure they have access to everything one might need to utilize mod features. However they need to purchase contracts for skilled gunsmiths from the wayfarers, and smith's guild contracts from the dwarves to access guns and super advanced stuff such as tungsten, mithril, and at extortionate rates in platinum, volcanic metal.
vs Arcanii/Warlocks: Much more limited spell pool, using tactical elemental mages like the dwarves, and no minions to draw on.
vs Hyborians: Less adept with ranged weapons and survival skills (hunting, fishing, and herbalism,) not as resistant to disease.
vs Orcs: Not focused as hard on playing aggressively. Lacks the heavy industry and versatility orcish reserves have in their castes and industrial buildings.
vs Gnomes: Way less advanced overall and doesn't play nice with animals, like most civs.
Vs Succubi: Same deal as with Arcanii and Warlocks, plus no innate heat resistance and the bad effects of cave adaption.
Their main strength essentially comes from their jack of all trades standing, leaning more on honest steel, settlement placement, and manpower over specialized skills, materials, or money.
