Turned out "elf" actually means "weird people from outside the Empire". The elf druid was some kind of ewok, while the elf wizard's race were an ancient academics-oriented civilization and so paranoid about their privacity/personal data they always wore masks.

In the end we decided that the conditions to be an "elf" were:

• Lives outside the Empire.

• Is not a human.

• Is probably magical.

• Is regarded (by Imperials) as a moral deviant. Ewok-elves were rumoured cannibals, and mask-elves were into weird sexual stuff.

• They don't like the Empire much either. Ewok thought they were too far removed from nature, and mask guy thought they were barely literate barbarians.

Another funny thing was when the players discovered some randomly-generated PW monster, I think it was a roach man. Masked elf spouts lore, 7-9, it was late and I couldn't come up with anything, so I said "ok, tell us one fact about this race, and I'll give it a twist". The player said "oh, they're known for being very very friendly, in fact the friendliest race in the Empire". Sure they were friendly, they were the sleazy used car salesmen of this setting. The group got some very useful information from the guy, but they also ended up spending quite a few coins buying a ton of useless trinkets.