The reason for exp penalties:

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Posted by Anonymous on October 21, 1999 at 14:38:49:

In Reply to: Okay, fine. Makes sense. But what about the racial exp penalties? Elves: 500xp. WHY?!? n/t posted by WaterAssassin on October 21, 1999 at 01:27:11:

Racial exp penalties are CF's way of balancing out the powers of each race.
Elves, for instance, have 25 int and autosneak. This is partly balanced out by 16 con and vuln iron, but not entirely.
The 500 exp penalty causes elves to have higher-level people in their range than do lower-penalty races.

I don't know why some classes have exp. penalties.
And I especially don't know why the penalties are applied as they are - does anyone really think that paladins are so much more powerful than shamans or transmuters?

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