Why Is There Racism?

First of all, different ethnicities exist because of human evolution.
The Earth has a ton of different climates and natural habitats that are extremely diverse, this causes "micro-evolution" to take place. As we know, we were once simple bacteria that thanks to A LOT of time ended up evolving into something much stronger and more adaptable to different situations. We evolved this way because it was the best way to survive in that period of time. The same thing then happened on a smaller scale, in smaller times. Generally, you can visually distinguish oriental, european, south-american, african, indian people and so on. This is because of small modifications to the basic human species that make us different in our own way.
Dark skin was developed mainly for the resistance to the UV light sent from the sun, thanks to this people with darker skin colors tend to have less sunburns (summarized). Asian people have "squinty" eyes which was a development intended for protection against wind and sand since the oriental part of the world was a desertland. These are just a few examples of what "micro-evolution" can be in a real world situation.
So, going back to the original question, why is there racism? It's the mind that creates that stuff. If you were put into a room with, on opposite sides, a friend of yours and some random person, you'd tend to stay closer to your friend since they're much more familiar with you and you know you can trust them. The same thing applies here. Just think about it: you're some Roman soldier and you see a legion of barbarians that look different, speak different and have different traditions. Two decisions can be made, show them how strong you are or try to communicate with them. Too bad we're humans, we like to hit each other with sticks. Instinct says to defend the people you know best from the ones you know less.
This is why. We see that physically someone is different from the rest of the people that we know and we categorize them into a different group. There's no problem with this, saying "I don't see color" is a metaphor, since anyone that can actually see will recognize a black person from a white person, an asian man from a european man. They are different, physically. Racists don't like this idea, so whoever is different from the general mass of people in that area should be excluded from society or even frowned upon. It's an old way of thinking, barbaric to stay with the theme, but with reason and civil discussions racists will actually recognize this and understand that's it's only a body.