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High Elves - Italians (just like pasta-lovers enjoy chasing women and drinking wine, these guys like breeding nymphs and hiding behind harmony ;D);
Dark Elves - Slavs (well, Slavs have always been strong in witchcraft and knowledge, as well as in severe punishments and clans under princes);
Mages - Arabs (hookah, naked rakshasas with pineapples and bananas, gold, precious stones, oil, all that...);
Gnomes - Norwegians with deviations or after Chernobyl =) (you can't just be that short, and they're always laughing);
Humans - German inquisitors (they're always nagging about light, dragon gods, and other nonsense, pedants);
Undead - these are people from the cemetery + units from the Age of Legends =) (and they stink, because they reek ;D);
Demons - Russia (well, their castle looks like the Kremlin, IMHO);
Orcs - Mongol-Tatars (because they're bums and don't know how to do anything).