(I totally stole this from the internet, but might expand on it later.)
Humans
When a mommy human and a daddy human... ah, you know how it goes.
Dwarves
Dwarves carve each other out of rock. In theory this can be managed alone, but in practice, few dwarves have mastered all of the necessary skills. Most commonly, it's a collaborative effort by three to eight individuals. The new dwarf's body is covered with runes that are in part a recounting of the crafters' respective lineages, and in part an elaboration of the rights and duties of a member of dwarven society; each dwarf is thus a living legal argument establishing their own existence.
Elves
Elves aren't made, but educated. An elf who wishes to produce offspring selects an ordinary animal and begins teaching it, starting with house-breaking, and progressing through years of increasingly sophisticated lessons. By gradual degree the animal in question develops resoning, speech, tool use, and finally the ability to assume human form at will. Most elves are derived from terrestrial animals, but there's at least one community that favours octopuses and squid as it's root stock.
Goblins
Goblins were created by alchemy as servants for an evil wizard, but immediately stole their own formula and rebelled. New goblins are brewed in big brass cauldrons full of exotic reagents; each village keeps a single cauldron in a central location, and emerging goblins are raised by the whole community, with no concept of parents or lineage. Sometimes they like to add stuff to the goblin soup, just to see what happens - there are a lot of weird goblins.
Halflings
Halflings reproduce via tall tales. Making up fanciful stories about the adventures of fictious cousins is halfling culture's main amusement; if a given individual's story is passed around and elaborated by enough people, a halfling answering to that individual's description just shows up one day. They won't necessarily possess any truly outlandish abilities that have been attributed to them - mostly you get the sort of person of whom the stories could be plausible exaggerations.
Orcs
New Orcs emerge from the fog and mist around swamps and mountains, once enough individuals from the other sentients species believe there are Orcs hiding in the mist. Entire tribes of Orcs are created just like that, and they are as scary and primitive or advanced as whoever believed them in existence thought they were.
All of the races can interbreed with humans, and this can lead to some very weird half-human variants. Since the concept of children is alien to the non human parents, they leave the offspring with the human parent. Humans often think the halfers are freaks, but try their best to bring them up according to both human and their other race's traditions. Often failing at the second part.
Gnome
Gnomes who want offspring, craft a small version of a gnome they then sneak into the garden of unsuspecting humans. Garden gnomes placed on fertile soil will eventually turn into a living gnome. The garden gnomes are crafted lovingly, with the traits the creator wishes the new gnome to exhibit, but often the new gnome turns out quite differently.
Asimaar, Tiefling, Changelings, Shifters and Warforged are as they are described in the official rules.
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