Does it make sense for fantasy and sci-fi movies, books, and games to exist in settings where magic, FTL space travel, elves, or aliens exist already?
Yes.
>>55238523
You already live in a world where 'real life' stories are greatly embellished. Even serious dramas about real life prices problems have all the boring life maintenance cut out and the humans are always way more passionate, or funny or emotional than regular people.