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Alan's point of view is, of course, also logical, but I think that even with a large number of factions, it will be possible to maintain balance, so I'm in favor of quantity, but no more than 15! :D
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I think that 12 would be a bit too much. We could make it 9 – three good, three evil, and three neutral. 9 is a good number.
What about 5 evil, 5 good, and 5 neutral races?
There was already a topic about dividing factions based on the AD&D alignments, meaning there shouldn't be more than 3 factions per side.
So, there will be 5 evil factions, but what will be the difference in their goals and views on the world?
The difference in their goals is that they don't all want to conquer the world together, but each one individually. :)
In my opinion, there are two ways to approach the number of factions... let's look at some examples...
First: Games like Age of Wonders had 12 factions in the first part, then 16+. There's no balance, but people play because of the variety, the partial uniqueness of each faction, etc. Currently, the game is dead and only a few fans remember it...
Second: The game Starcraft has THREE factions. The balance is almost perfect, and the factions are ABSOLUTELY different. It participates in all esports competitions in the world. In Korea, it has become a religion. Nine years after its release, it remains the BEST strategy game.
Personally, for me, balance and uniqueness are better than a multitude of pseudo-different factions.
There is a third way. In Civilization (a game), for example, there are MANY races (clearly more than 3, and even 9), but each of them is unique in its own way, and the tactics for playing as each one are different. However, this does not make Civilization a bad game, nor does it cause it to fall into oblivion. So, more is not always worse.
This is suitable for Civilization because it is a global strategy game. In Heroes, there is no need for a dozen or so factions, for the same reason: they are unlikely to fit on one map, and it would be impossible to enjoy the full experience of an all-faction battle...
The more, the better, as long as balance is considered!
And there are many examples to draw inspiration from: instead of inventing absurd dwarves, we have mythologies: Scandinavians, Arabs, Egyptians, Mongols, Aztecs, Slavs, Chinese. And that's just scratching the surface. There won't be any problems with worldviews either. You can create light (but light people and light mages are very different), dark, neutral (intervening in both sides), non-aligned (complete neutrality), chaos (total destruction), order (strict control), diplomatic neutrals (using whatever is convenient for them).
or some race of people who are offended by the world

