» Sun May 29, 2011 2:16 am
Humans and Elves both come from the same world, originally. Neither is any more evolved or high than the others. The Altmer think they're the closest to the ideals of the et'Ada or Greater Spirits but that's just their cultural bias.
The Bosmer and Khajiit supposedly split off from the same ancient bloodline of Aldmer (originally all Elves were of one race which split into many, just as all men were Nedes. Except for Redguards.) The difference is that Azura gave the Khajiit a special gift, according to some legends. A god of the Aldmer named Y'ffre tried to steal this gift and her followers became Bosmer. That's the short version of the story. You may want to read http://www.imperial-library.info/content/morrowind-words-clan-mother-ahnissi-her-favored-daughter. There's no proof that Khajiit can interbreed with Elves or Men though.
The Argonians are the children of the Hist, who came from another world altogether although the Hist are related to the Aedra and Daedra somehow. Not a huge amount is known about why Argonians take the form they do or why they differ from region to region. The Hist decide their forms.
Orcs and Dunmer are both groups of Elves who were cursed or changed. They were both originally Aldmer, just like the Bosmer and supposedly Khajiit.
Eight of the ten races can interbreed at will but there's no proof that Khajiit or Argonians can breed with anyone outside their own race. They can have romantic or physical relationships but no babies.
To simplify this:
Argonians can breed with: Argonians
Khajiit can breed with: Khajiit
Imperials can breed with: Imperials, Bretons, Nords, Redguards, Altmer, Bosmer, Dunmer, Orcs
Bretons can breed with: Imperials, Imperials, Nords, Bretons, Redguards, Altmer, Bosmer, Dunmer, Orcs
Nords can breed with: Imperials, Nords, Bretons, Redguards, Altmer, Bosmer, Dunmer, Orcs
Redguards can breed with: Imperials, Nords, Bretons, Redguards, Altmer, Bosmer, Dunmer, Orcs
Altmer can breed with: Imperials, Nords, Bretons, Redguards, Altmer, Bosmer, Dunmer, Orcs
Bosmer can breed with: Imperials, Nords, Bretons, Redguards, Altmer, Bosmer, Dunmer, Orcs
Dunmer can breed with: Imperials, Nords, Bretons, Redguards, Altmer, Bosmer, Dunmer, Orcs
Orcs can breed with: Imperials, Nords, Bretons, Redguards, Altmer, Bosmer, Dunmer, Orcs