Let's start out with a super important question: what is a beast?
Based on his margin doodles, Harry seems to think a beast is "a big hairy thing with too many legs." But we're guessing he's simplifying things.
Mr. Scamander begins by going over several different types of creatures—werewolves, centaurs, and trolls. Werewolves are humans part of the time, after all. Centaurs are half human. Trolls walk upright and can even talk.
Which of these is a being—"a creature worthy of legal rights and a voice in the governance of the magical world"—and which is a beast?
It's tricky, right?
It was pretty tricky for the wizards trying to figure out these categories, too.
Back in the 14th century, the chief of the Wizards Council said that any magical creature that walked on two legs could be considered a being. Everyone else would be a beast. (We guess the rule was two legs good, four legs bad.)
That went pretty awful once the goblins and troll and pixies showed up and started smashing everything. Clearly, leg count was no way to go.
Okay, so how about making beings out of anyone who could speak human language?
Again, the trolls (who could figure out a few words) ran wild. The ghosts got offended when everyone seemed more worried about the needs of the living. And, of course, the merpeople were left out because you can't understand Mermish on land. Sigh.
Finally, in 1811, witches and wizards figured out a sort of workable solution. They decided that a being was "any creature that has sufficient intelligence to understand the laws of the magical community and to bear part of the responsibility in shaping those laws." Sounds good to us.
That meant the trolls, who were actually pretty dumb, got downgraded to beasts. Merpeople became beings. Fairies, pixies, and gnomes, which looked pretty human, became beasts as well.
Of course, there are Muggle-haters out there who still would like to see Muggles classified as beasts. (Cough, Death Eaters, cough.)
And people have a tough time agreeing on other creatures that are intelligent, but prone to extreme violence, such as werewolves or Acromantulas.
But there are still other questions to answer. Like why don't Muggles notice these fantastic beasts running around?