A fantasy novel without an empire (benevolent or evil) is like a man without a skin: all those muscles have nothing to hold them together into a recognizable shape. Let’s face it, no human society exists without government. Anarchy only lasts so long; it is quite simply unsustainable. But in fantasy novels, traditionally, the empire is the government of choice, though the monarchy is a close second. I want to look at both of these systems, though, as they are relatively closely related, especially in the genre in question.
At the end of the day, there is very little difference between an empire, a monarchy, and a dictatorship in regards to the concentration of power. The last of those three is usually militaristic in nature, like the first, but often does not rely on hereditary rule. In short, all true monarchies are dictatorships, but not all dictatorships are monarchies. The primary difference between an empire and a monarchy is scope. Monarchies may form empires, which are conglomerates of territories of diverse peoples conquered and governed by a single government. Now, you can have an empire run by a democratic or republican government, such as the United States, but, more often, empires are created by dictators expanding their nations’ control to other people. The most recent example of this is the U.S.S.R., though a case could be made for China still being an empire itself, and thus the oldest empire in existence.