"Beast Races" is a collective term used by more provincial and prejudiced Humans and Mer to refer to the Khajiit and Argonians, due to their stronger resemblance to more primitive creatures such as feral felines and reptiles, respectively. It continues to exist in the vernacular of bigoted men and elves even three centuries after the legal enslavement of these races was abolished.
This bigotry towards Khajiit and Argonians is especially evident in Skyrim. Both 'Beast Races' are generally banned from entering the major cities in any hold. For example, Windhelm is known not only for its 'Gray Quarter', a ghetto reserved to the refugee Dunmer, but also for its rejected population of Argonians who live on the city's waterfront, sharing one apartment in the city wall.
Khajiit must rely on direct commerce with people found on the road or in lesser, unwalled communities, or resort to living as bandits (as do some Argonians). Aside from this, there is also the famed Khajiit Caravan tradition, by which a small group of Khajiit travels a regular circuit between two major walled cities of Skyrim, residing in temporary camps in established locations and doing business with anyone who comes in or out of the nearby city.