I saw the redirect on the Novel board, and jumped over to read, since I'm a fantasy writer.
It's a classic caution not to take something that exists and just plop a new name on it. You don't take rabbits and call them schmeerps, or something like that. All you have if you do that is a rabbit story.
As a reader, if I read a book that has a race of pointy-eared long-lived ancient forest dwellers that are called Pillafs, and some short, strong stoneworkers called Dunks who happen to hate the Pillafs, I'm immediately going to think "ripoff." I think readers are smart enough to see through search-and-replace naming.
As a writer, I try to write new races and stay away from stereotypes entirely, but only if required by the story. By all means, if the story has some feature that requires Tolkienesque elves and dwarves, then I'd use them -- but I'd call them elves and dwarves. Generally, though, if I need two warring races, I stay away from the obvious elf/dwarf stuff and make the things that /do/ differentiate the races things that are pertinent to the themes and the plot of the book -- say, an air race versus a sea race, rather than wood/stone. Or even better, an argumentative race versus a nonfrontational race, rather than pointy ears/stocky frame.