You have two questions - why it's like that, and what happens if it wasn't. I'll try to answer both.
Favored Enemy through the ages
In AD&D, you got your bonus against all sorts of monsters, from goblinoids to kobolds to giants, but not dragons or humans or aberrations. In AD&D 2e, you had to pick a specific creature, but at least you got to pick. 3e's version was in the middle of the historical spectrum - you get to pick a range of creatures to apply your bonuses against. Thus we are probably not looking at a balance consideration - this decision was inspired, at least in part, by what came before.
Humanoids are more common and more diverse
Imagine two beholders. They are probably very similar; one might be advanced by HD, one might have different feats. Imagine two kobolds. One might be a CR 1/3 cannon fodder minion, the other might be a 20th level sorcerer that can casually blow up you and your family, because he advances by class levels. I don't think it's too much of a stretch to say that the majority of the NPCs in any campaign will be humanoid - elves, dwarves, and so on. Being able to apply your bonus against all of them would be much better than picking aberrations, for example.
In a lot of campaigns, the subtype requirement will not come into play. You fight kobolds and lizardfolk, but not the dwarves, because they are your friends. Or vice-versa. Only you know how many subtypes are represented by the designated enemy races in your game.
Will it break?
Imagine that your ranger just straight up gets Favored Enemy bonuses against everything he meets. +2 damage on all weapon attacks, gradually scaling to +10 at level 20. And bonuses to a few skills. Is that broken? At my table, the answer is no. At your table, the answer might be different.
You also have to consider add-ons to Favored Enemy. Three powerful ones come to mind: Swift Hunter (deal precision damage to favored enemies even if they're immune), Favored Power Attack (double the bonus from Power Attack), and Nemesis (detect favored enemies). If you allow such options at your table, the value of Favored Enemy goes up, but it still only matters only as much as the diversity of your cast.