The Taxonomy of Fantasy Species

Here's the third dreamwriting idea. It's a little longer because I've discussed it with some people already.
The idea was that, in this fantasy world, there were...groups of creatures. A shown here

Humanoids are your standard fantasy PC races. They aren't magical by nature, but can learn to use magic with training and practice. They're common, widespread, and intelligent. Technically, they fall into the category of "Mundane Creatures" with other normal wildlife
Humans
Elves
Dwarves
Gnomes
Orcs

Beastmen are close to Humanoids, and can interbreed with them readily. These are groups of shapeshifters, who often times have a small amount of magical prowess. They can do little specific things, like heal, or manipulate fire. Anything more still times time and learning.
Werewolves
Catfolk
Kitsune

Mythics are relatively common, magically-powered creatures. The more powerful sentient ones are capable of breeding with Humanoids and Beastmen to a limited degree via magic, although their children are always almost completely humanoid or beastmen. They're pro efficient at shape-shifting into humanoid forms to interact. They come in a few basic groups.

Group I are the most common, and often times less magically powerful. They have four limbs, just like mundane creatures.
Harpies/Siryns
Minotaurs
Satyrs
Cyclops
Giant
Goblin
Lizardmen

Group II are uncommon, and quite powerful magically. Many of these creatures are nonsentient wildlife, and some are very intelligent magical beings.
Dragons
Griffons
Pegasus
Hippogryf

Group III are not rare, but hard to find, as they keep their civilizations well-hidden. They are all incapable of breeding with humanoids, being oviparous, and tend to be very secretive.
Naga
Merfolk

Fey are sort of an outlier, as the feyfolk are formed out of pure magic and energy. It's hard to say what they really are, as they come in seemingly endless varieties and are often hard to contact or have a decent conversation with.
Fairies/Pixies
Neirids/Nixies
Sidhe

The Undead are a whole different class altogether.
Ghosts
Zombies
Flesh Golems
Necromancers
Lich

Generally, in the fantasy world, no groups would really get along. Humanoids don't like magical creatures hanging around too much. Mythics tend to be combative and agressive. The Undead are artificially created. Fey just mess everything up.

But the dream was about, as far as I recall, a Dragon woman who had fallen in love with a human prince that had been sent to kill her (Humans hunt dragons for sport, still. Dragons find it inconvenient, but have no real social workings) and he fell back in love with her as well but was betrothed to this princess and blah blah blah you should be able to see where this story was going. It also involved a flying castle, haha. :D

Well, that was some inane rambling.