A racial enclave is a geographic area - usually a smaller portion of a larger city; a gated community or parallel society - with high racial concentration, characteristic cultural identity, and economic activity; a racial equivalent to an ethnic enclave. Racial enclaves may or may not have official recognition, their own administration, laws and even finances. A racial enclave is usually represented by a phylarch, which is the racial equivalent to an ethnarch.
Major cities in Etrand - such as Grandfolk, Copperport, Steelhelm and Dracfold - originally had racial enclaves for both the Wood Elves and High Elves. Both were recognized communities within the cities, and - at least in Grandfolk - were allowed to form their own gated communities and parallel societies, in which they were subject to their own laws, maintained their own schools, churches, prisons and various other institutions. Both communities were represented by a phylarch - a position with official recognition -, although how was the phylarch chosen was neither widely known nor set in stone. In addition to officially representing the community, the phylarch's responsibility was to collect the extra tax from the community that was needed to finance the various institutions the community made exclusive for its own use.
After the Demonic Invasions of Artograch, a lot of Elves left Etrand to return to their own countries (High Elves back to Froturn, Wood Elves back to Dragoc), which were inviting them back home with news of economic boom. The remaining Elves remaining in Etrand largely became integrated members of mainstream human society, rendering the racial enclaves and phylarchs obsolete. While the Elven community of Grandfolk would see a revival later on (during the 7th century AEKE and afterwards), it would never regain its old status as a semi-autonomous entity with its own officially recognized representative.
After 300 AEKE, the age of ethnic enclaves in human-dominated cities came to an end, with the major geographic demarcation lines being based on class instead of race in cities like Grandfolk after that time. In a strange twist of irony, the Dwarven cities of Zorod Naugi im Pkhaur and Zorod Koldo im Neuna would end up having Human enclaves built within them, both headed by unofficial phylarchs that required birth in said city for nomination.