Is the Fantasy genre as limited as it seems to be?

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I don't read fantasy novels, but I sometimes read the summaries. So many of them seem to be social dramas or magical quests set in a universe modeled on medieval Europe.

Common features of the fantasy genre include:

• A Secondary World: A world whose connection with our present day world ranges from nominal to non-existent. It could be the remote past or future, or simply a-historical.  The inhabitants can be anything from human only, or include other species (or "races" as fantasy likes to call them) of intelligent peoples such as elves, dwarves and orcs.

• Appeal to a Pastoral Ideal: Much genre fantasy, of all genres, appeals to the pastoral ideal, one reason for the pseudo-medieval settings.  Even urban fantasies will quite often depict cities as blots on the landscape, whose denizens are blinded to what really matters by material ephemera.  There are some fantasies, however, which either deliberately take the opposite stance or present a more balanced worldview.

• Magic and Powers: Functional Magic is almost always present, though its role in the world can vary widely. It might be either respected, feared, persecuted, or simply not believed in.  Its frequency varies from the stuff of legend, through to rare but available to the well connected, up to a ubiquitous part of everyday life.  Magitek usually lies at the extreme end of this scale.  It may be taught through a master and apprentice system, or in a magical university, when it can be taught at all.  When wizards are immortal, they don't need to train successors, and may not be able to.

Source: This TV Tropes Article on the Fantasy Genre.

Thats why they are called "sword and sorcery" novels.

The genre started when it still really was the Middle Ages- in the 1100s they started write epics based upon the legends of King Arthur told since the Dark Ages and the late Roman times.

Harry Potter is actually rather modern in setting- partakes of medeaval creatures and concepts put plugs them into a setting much like a modern school system.

The current fad of comic book super hero special effects blockbusters is a type of fantasy (though its not usually lumped with the sword and sorcery genre). And interestingly not only are Marvel comicbook superheroes very olympus like in their family squabbles, but these films heavily and shameless barrow from both ancient Greek and from Norse mythology- even lifting actual characters like Thor.

Another list of thing common to most fantasy stories:

• A Big Bad Evil being who must be destroyed to Save the World!
• A doomed romance between an elf and a human.
• A too-beautiful heroine who is either an elf, a princess, or both.
• A hero with a tragic past (i.e., entire family died in a plague / war / natural disaster / monster invasion / et cetera).
• A rag-tag group of social misfits destroys the Big Bad Evil Being and saves the world.
• A second-tier character who betrays all the others.
• All dwarves are ale-swilling miners and tunnelers, but tough fighters who always survive a battle.
• All evil wizards have great magic that they waste on themselves.
• All gnomes are skilled craftspeople who enjoy jokes and pranks.
• All good wizards have great magic that they rarely ever use.
• All Halflings/Hobbits are always hungry.
• All male elves are graceful, sexually ambiguous, and revering of nature.
• All orcs are ugly, brutish, and evil.
• An ancient prophesy that is usually misinterpreted until it's almost too late.
• An ordinary-looking family heirloom that turns out to be an all-powerful magical object.
• Epic sword fights that take place in a single short paragraph.
• Humans are the most destructive race, yet they will eventually inherit everything.
• Moral of the story: "______ is Our Greatest Treasure".
• The powerful villain has one weakness that he inexplicably fails to protect.
• The setting closely resembles medieval Europe, including a feudal society (serfs, gentry, nobility, king, et cetera).
• There is only 'evil' and 'good' with no variation or shades-of-grey.

In every genre you can find authors who have some intelligent reflections and authors who just fill pages with predictable text.
From Fantasy genre, I like authors like Gayman or Pratchett, or Ursula LeGuin - they rarely fill any point from the list above, unless (the former two) autoironically.

I think that National Lampoon's "Bored Of The Rings" nicely deconstructed the entire fantasy genre.

One reason I like Brandon Sanderson is that he gets outside this box a bit. In the Mistborn series, he allows the world a period of rapid innovation, so from volume 4 onwards the level of technology is more 1910 than 1300. And his Stormlight Archive world is so bizarre it's hard to know what to compare it with. A cross between the Epic of Gilgamesh and pre-Civil-War southern US, maybe?

Pratchett also did this- the Discworld books are full of fantasy versions of modern technology, ranging from Filofaxes to cinema cameras. Fantasy authors are starting to reach further afield for their cultural references: Kameron Hurley's "Mirror Empire" uses a non-standard sytem of five genders borrowed from the Bugis people of Indonesia. Have to admit, though, I do still love a good epic-slog-across-quasi-medieval-continent story.

There is better fantasy setting variety, you just have to know where to look (I'm not that great at knowing where to look). Fantasy from non-medieval eras tends to be described with 'punk' terms. Steampunk involves magical elements added to Industrial Revolution-like times, dieselpunk is for early 20th century level tech, cyberpunk is for 90s tech and onward. There's tons of other 'punk' subgenres like that.

Harry Potter and the like are generally called Urban Fantasy, where magic and such exist in secret in modern society (eg: Percy Jackson, Artemis Fowl, Inkheart). https://tvtropes.org/pmwiki/pmwiki.php/Main/UrbanFantasy

As for branching out beyond Europe-like settings, I'm not as well-read as I'd like to be so I can't speak from experience but this list might help you get started: http://suggestmesome.com/94-fantasy-books-in-non-european-settings/
There are fantasy writers everywhere who are more than eager to tap into their own cultures' myths and legends for inspiration.

Even in more conventional fantasy settings there is variety of genres to be found. Terry Pratchett is famed for comedic fantasy. H. P. Lovecraft wrote numerous horror fantasy stories set mostly in early 20th century New England. (Also you will never struggle to find romantic fantasy novels....)