Ehhh, in moderation incest technically is only a matter of ethics, yes. But over the course of several generations incest becomes much more threatening due to genetics. In a large population, one member of the group developing a minor genetic mutation or defect will have a negligible effect (unless is it a particularly desirable mutation that makes the subject a more attractive mate and thus gets spread). A minor genetic mutation like this will get passed, sometimes, to said subject's children, and from them to their children, and so on and so forth. Each time you roll the genetic dice you have a chance of the mutation proceeding on, or disappearing. But the mutation is much more likely to continue on if both of the parents have the mutation. And what better place to get the same mutation than siblings of the same mutated parent? Now, mutation sounds like a very bad word, but really these changes are usually minor so if one or two generations do this its fine. But in the long term, mutation upon mutation can stack up and without a wide breeding pool, have little to no chance of ever being culled from the genetic pool. In this way, minor defects can build into major genetic threats given enough generations.
TL;DR In a large breeding pool, people who are more attractive get more mates, people who are less attractive physically, mentally, or economically get less, thus leading to evolution. In a small breeding pool, which leads to incest, you can't choose one over the other due to limited options. So you risk the chance of undesirable or harmful mutations developing.
