It always made sense to me. The xp penalty is designed to balance races pre-hero, but doesn't matter as much at hero. Therefore, the edge points are to give the mechanically weaker races a boost when everyone is the same level.

If you are a human warrior hero then you can attack much lower level people than if you were an elf paladin hero. It fades to some degree, but I still think it has an impact - especially in cabal wars.

My guess is that it's because with the exception of perhaps a few mage builds, the lower XP penalty combos tend to be less popular / mechanically weaker than say, d-elf warrior or elf paladin.

This also would've been decided before we adjusted race penalties and removed class penalties completely, though I haven't bothered to think through the implications of that yet.

I forgot that at time of implementation class XP penalties were a thing too. My basis of comparison is thinking that arial/felar assassin would both get additional edge points as compared to say X giant warrior. And, I'd consider those combinations comparable at hero.