It highlights how race and culture intersect. Some of the damaging stereotypes reside in each one. Many people in the Dominican Republic see a distinct difference between themselves (Dominican) and their Haitian neighbors (black), and while many Americans would see no obvious difference between them in lots of cases, they see themselves as racially as well as culturally distinct. Likewise, take a woman from a rural village in Mexico with some Aztec features, and depending on how she dresses, she can come across as Mexican, Indian, mestizo, or any number of other cultural classifications endemic to the perceptions of people in that area.
I don't see it as passing, in the old-fashioned sense, because most people in the world have the opportunity to celebrate many different cultures and traditions of their ancestry in their own identity. It all depends on how we perceive the fundamental unit of society. Most of us here will see that as the individual, but many people hold dramatically different views, holding the family, village or tribe as the most important unit of society. A few terminally hopeless fools believe in race, and act like they consider race the basic unit of society.
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"I find that the best way [to increase self-confidence] is to lie to yourself about who you are, what you've done, and where you're going." - Richard Ayoade