I added the color boxes to highlight what I wanted to talk about. Let's start with the green box, which is the random city encounter table. According to this chart half of all city encounters will involve Men (meaning bandits, brigands, berserkers and various high-level NPCs with entourages) while the other half of all city encounters involve a run-in with various undead. Obviously this simple chart predates the more elaborate and awesome options in the 1st edition DMG, Ready Ref Sheets/City State of the Invincible Overlord, or Midkemia Press's Cities. And while this particular chart omits the all-important random harlots, I really like the suggestion that OD&D cities are positively crawling with ghosts and skeletons.
Consider for a moment the fact that some cities in our world are thousands of years old and we don't even have elves around. If even a small percentage of the dead return to the world of the living each year, how many will be lurking around a city after ten generations? A hundred generations? Under such circumstances ancestor worship might be a practical necessity, to keep Uncle Lou's spectre from getting out of hand.
Moving on, the purplish oval shows that referring to the "Giant" sub-table is an equal possibility in all terrain types but the city. The blue box contains the Giant sub-table. Looks like this table is the origin of the term "giant class" as a means of referencing the evil humanoids that rangers are extra skilled in beating up. The original "Giant class" of humanoid consists of all the critters on that list starting with Kobolds and stopping with Giants. The last four items on the list, Gnomes, Dwarves, Elves, and
So under these rules you can encounter a dwarf in a swamp, an ogre in a desert, and elves in the mountains. In fact, you have an equal chance of finding them there as you do of running into such creatures in what we nowadays consider their native environs. I don't know about you, but this situation immediately suggests to me the possibility of secret races such as Desert Dwarves and Hillbilly Trees. Or maybe elves and kobolds get out a lot more than I normally suspect.
By the way, I can't find halflings/hobbits on any of the OD&D wilderness encounter charts. I think I'm okay with that.