not necessarily wrong but for normies 'fantasy' = LOTR, game of thrones, DnD, world of warcraft, league of legends type stuff. on a spectrum from 'misunderstood '''realistic''' whitewashed history but with magic for some reason' to 'how does this deviantart poster even manage to draw so many belt buckles on their overly detailed glowing eyes steampunk OC'

Pikmin is technically sci-fi to normies because it has space ships in it

No, you're not wrong "Fantasy" is being used differently between the two of you.

Driving Crooner is using "Fantasy" to mean western medieval fantasy in the tradition of Tolkein.

In its broadest form fantasy of course has no particular relationship with monarchy. Diso Elysium is also in a fantasy world but certainly not monarchist.

I agree that it doesn't have to be, in part because I'm writing a fantasy story that takes place in a realm that practices "socialism with holy roman empire characteristics"