On one hand it makes sense that medieval european social relations imply, well, medieval european social relations and it makes sense to use your novel (or your show) to examine those.
On the other I can relate to many people wanting to see women in medieval fantasy to be represented in some other way than constant misery porn.
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I think for both of them it comes down to why it exists in your setting?
Is the fictional society racist just because and it’s not really relevant, there’s just an underclass race for no reason? Or even worse, it’s idolized? That’s bad.
Is the fictional society racist because your work is trying to comment on real racism and it’s an important part of the story? That’s fine.
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What you are describing is how Hollywood and Disney has presented medieval history up until recently, and it was basically just monarchist propaganda because it glorifies feudalism and hides all the bad parts
The Elder Scrolls does racism fairly well. Prejudice and bigotry coexist with ignorance and simple superstition. The politics of Morrowind are deeply entwined with the recent end of the race based slave plantation system. Skyrim's secondary conflict is between the provincial blood and soil stormcloaks, the cosmopolitan empire, and the fanatically, supernaturally xenophobic Thalmor. Khajiit aren't allowed to entire stormcloak cities, dunmer refugees from Vvardenfell are confined to a ghetto and face racialized violence, the ongoing low intensity conflict in the reach pits the indigenous reachmen against the Nord colonizers, Redguard travelers from Hammerfell are regarded as stranged and exotic. It's not always well done, but the racism in Skyrim generally reflects the material realities of the people involved instead of simply being a clusmy allegory for a real world situation.
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