[Morgeruat]

well, first of all dwarves can't get the required charisma to be a paladin, they have a max of 17 BEFORE racial adjustment, they can get a 16 Chr. max, elves are a bit more problematic, for one they're normally chaotic manner makes them ill suited to devote themselves to the fight against chaos and evil, plus the idea of paladinhood is one unique to humans, while other races have differing views of what an archetypical hero would be, for elves this comes in the form of a bladesinger normally. while a dwarven hero would be much more of a fighter type rather than the strict focus on spirituality that a human paladin would have, in fact of all the demihuman races (elf dwarf, gnome etc.) only halflings approach this with anywhere near the kind of mindset a human would have, and theirs is much more laid-back(Mazzy is an example).

In Dragonlance however elves, and half-elves are the only non-human races that can be Paladins, why this is allowed is up to the designers of that world, much like allowing elven druids in forgotten realms, a practice normally restricted to humans and 1/2 elves, and the occasional green-bearded dwarf (see the Cleric Quintet by R.A. Salvatore)