The 1500s wasn't when most of the world's countries began toppling kings left and right. That was a gradual process that saw many of these countries temporarily revert back to monarchy such as France before eventually being completely displaced in favor of republics-in FFXIV we've been "liberating" what feels like country after country and now that Garlemald is concerned its a valid concern to wonder what will become of what remains of the world. As for LotR given the thematic consistency of its setting, whatever year it takes place in is irrelevant-its the middle ages plain and simple as opposed to the mishmash we see going on in FFXIV.
I have no interest in continued stories about colonialism vs tribes-it just does not appeal to me on a fundamental level. I am more interested in kingdoms warring between each other and the interactions between the heads of state and the people in their armies. This is why Heavensward appeals a lot to people, Estinien is a revenge-driven soldier, Aymeric is knight in shining armor #1, Ysayle is a heretic on the run, and the religious background of Ishgard helps flesh out the character of the nation. This is a story whose premise appeals to many, with us being thrust right into the center of the action. For the most part it also didn't wear people out with abstract themes or callbacks to tiring issues that people already lecture us enough about on social media on a daily basis. I will not stick around for 2 years of an expansion droning on and on about how colonialism/kings=bad, I'm sick of it.
Also keep in mind that the real world then continued to have many prominent monarchies in Europe up until World War 1 imploded everything. Those that remain have since adapted to modern times and continue to serve as positive symbols of their respective nations, as opposed to republics whose heads of state come and go like the wind and despite going on about freedom and liberty, life doesn't seem to get any better for ordinary people.
I'd much rather in game for nations to be pitted against each other once again or have to grapple with out-of-control forces of nature, as is often the case in Final Fantasy games instead of another round of "look at how amazing our morals are compared to the bad guys" with the same cast of unimpactful characters while the only interesting ones are sent off to who knows where, as more kingdom falls and more states are added to the United States of FF.