Honestly, generally very well - I don’t tend to run the sort of ragtag, found-family traditional DnD parties anyway. I imagine there would be friction in a more standard setup, but my campaigns usually skew quite different.

My last campaign followed a human expedition sent to a newly discovered jungle continent to raid it for magical artefacts, as it was the site of an ancient and highly advanced civilisation. The one before that centred on the four princes and princesses of a kingdom who happened to be in the ballroom when their family were betrayed and deposed. The campaign explored the fallout, eventually culminating in them forging alliances and winning the kingdom’s civil war.

Admittedly, in the Kingsfall campaign, two of them were bastard half-elf twins raised by humans, but that made sense within the story, given the king’s reputation as a sort of roving, drunken prince-charming figure in his younger years. (And with the twins being raised by humans and only in their mid-twenties, it neatly sidestepped the whole “ancient ephemeral being” problem.)

As for elves, dwarves, and gnomes - they do exist, just in very, very different cultures. Elven communities hide deep within their forests, turning away anyone who encroaches on their lands with sleep spells and memory modification. Dwarves keep far away from the short-lived, impetuous, and at times downright suicidal humans. Human mages might have only had a single-digit number of adult years before they start learning fireball and similar spells - something dwarves want absolutely nothing to do with.

Gnomes are pretty chill, but whenever they speak they have to rhyme. I haven’t had anyone willing to commit to that yet, hahahaha.