Fantasy and real life
Fantasy writing can be a huge allegory where all the races, places, people and events correlate to equivalents in our world. You could also look at fantasy worlds as being like alternate dimensions of our world, where all the qualities, places and events have been kinda mixed around and matched differently.
Of course this could be heavy-handed: “This guy’s obviously speaking about the cold war. The gnomes are the Americans, the dwarves the Russians, and the super-mushrooms are nuclear weapons. But why does he hate Russia so much?” or “Hey! This is really about the clash between baseball teams, not dragons and elves! This guy’s got an agenda! I want an objective story!!”
Now the way I see it, there are some great advantages to this one-step-removed-from-reality-approach. If an author stays away from blunt and simplistic expositions of one point of view, he or she can say a great deal about this world we’re in, without getting caught up in specifics of race, country and history which people feel really personal about. The moment I say Egypt, or France, or India, or Muslims or Africans or women, people with experience knowing or being those places and races will have a host of preconceived ideas. It’s harder for me to start fresh. But if I make a world and races up, drawing inspiration from this world, I might be able to show you a fresh take on things here.
On the other hand, if an author sets fiction set in this world, he or she can draw from readers’ experiences more directly. If you’ve been to London, if I just write a few lines about walking into Leicester Square on a sunny day, a whole picture replete with scents and sounds will come to your mind.
An author writing fantasy will generally try to have the best of both worlds: setting their story in an alternate world, but drawing many things from this one. A lot of the flora and fauna may be the same, as well as the laws of physics and ways that people interact, express emotions and so on. You can really only go so far from this world without losing your readers.
If you don’t believe this, please read the following poem I wrote in my own, newly invented language. It’s not in the boring Roman Alphabet.