It's always been possible, as long as you don't use the D&D IP.
So the underlying rules are fine, but having monsters like mindflayers, spells like "magic missile" or "melf's acid arrow", locations like Baldurs Gade, Waterdeep etc are all verboten.
Magic missile is probably generic enough - lots of non-D&D works include a magic missile (both with that name and with similar properties). Similarly, a lot of D&D lore is just repackaged fairytales so you can easily have a setting that is not quite unlike D&D but doesn't use any of their IP.
Bit murky with Wizards of the Coast buying TSR and making Baldur's Gate Magic sets.
If it's not generic, was Wizards of the Coast stealing from TSR when it used D&D's Counterspell as the name of a Magic card? Before buying TSR, to be clear.
"Fireball" should be generic. Plenty of prior art on those, I should think.
Yeah I realise now that Magic Missile was a bad example. But it actually illustrates how murky this business is, because /in some cases/ things are deemed IP, and some things are not. It's not easy to tell whether some D&D artifact is part of the SRD or not, without reading the whole thing.
I was for example surprised to learn that Mind Flayers are protected, like the whole race and all it's properties. Dwarves and elves are not. I think anything Underdark, including Deep Gnomes, Duergar and Drow are also protected. There are probably certain magical items that are also protected, like the Immovable Rod, or Ring of Feather Fall, etc.
For home games none of this matters of course. But I'm certain it's going to be problematic for players that want to stream their play sessions, creators of other media like games or boardgames that want to make something D&D-adjacent-but-not-such-that-it-awakens-the-dragon and so on.
Another poster pointed out that a lot of it likely has to do with iconic images from media that had broader appeal than the main RPG. Things like Baldur's Gate, the Drzzt novels, etc.
Also, for things like "Dwarves and elves", that'd be a bold move on their part. As so much of the original D&D was poached from a variety of sources (see Appendix N [1]) they need to be careful if trying to claim those.
I mean, the SRD is pretty plain - there's a list at the beginning of stuff that is asserted not to be Open Content, and Underdark and Mind Flayers are on it, and in contrast the open content part includes names and stats for all the other races and items you mentioned. So it's pretty unmistakably fine to use those things, themselves, however one likes.
But obviously there's also a second layer where you can't publish your own novel about, say, the intricate details Drow matriarchal society, that aren't in the SRD and came from WotC novels and sourcebooks. Presumably it's a bit like with Sherlock Holmes, where the character himself is out of copyright but certain lore details added in later books are still covered.
