the species thing isn't exactly what you said. there are 3 things that can happen that i remember:

1: most cross-species breeding results in nothing.

2: some, like horses and donkeys, or tigers and lions, results in babies that will grow up normally except that they can't breed themselves.

3: and rarely, like in grizzlies and polar bears, the result is a baby that will grow up perfectly and still be fertile

interbreeding in DnD would be the 3rd option.