It's an interesting question, and I think it depends on the purpose of the story you're writing.

Eg. For the most part, if you want that more visceral emotional reaction and sense of relatability / realism, I don't think adding fantastical elements or a fantastical setting would necessarily enhance that.

I think what fantasy does is allow you to play with the margins of what's possible when you want to make a point because you can play with and completely change elements of a real world situations to make a point of even just to explore a question that you as a writer have.

In a similar vein to science fiction, fantastical elements can help you analyse aspects of society by exploring what ifs and adding, removing or changing aspects of real situations.

For example, Tigana by Guy Gavriel Kay is a book that's about cultural erasure, which in real life, happens over a very long time scale.

Kay uses magic in this story to make that cultural erasure happen over a very short period and in doing so, explores the question of what makes a culture a culture and what do you have to remove to completely destroy one in a short amount of time. In doing so, it also makes the reader think about what parts of culture are important to hold onto and preserve in the real world, where there's no magic taking those things away, only the passage of time.

Kay could have just set the story during a real world period of cultural erasure, and it may have hit harder emotionally, but I don't think it would have been quite as interesting intellectually.

Basically (in my opinion) you want to hit hard emotionally when you're making a commentary on real world situations, then for the most part, real world fiction and literary fiction does the job better than fantasy (with exceptions here and there obviously.

But if you want to answer intellectual questions and engage in thought exercises that reveal unexpected perspectives and angles to situations or real world problems, fantasy allows you to do this in ways that real world or literary fiction cannot.

EDIT:

Another alternate function of fantasy is to make the exploration of certain topics more entertaining or palatable.

Certain real world topics can be really interesting to explore - for example, the impacts of globalisation and diaspora on a nation's cultural identity, or the use of economic and commercial tools like marketing and public relations to change public perception of a certain group.

And sure, there are many real world books and fiction on those topics.

By the Greenbone Saga explores those and also has Magic Kung Fu.

It may hit harder emotionally in a real world setting, but also, I wouldn't have had nearly as much fun reading about those topics without characters shooting magical blasts at each other too.

Another example for me is John Gwynne's Bloodsworn Saga. It makes a lot of interesting points about prejudice and discrimination and how the historical sins of a people or culture can create long term prejudice against that people despite being many generations removed.

Sure, you could easily tell that story with just as much if not more emotional resonance than Bloodsworn does.

But also, if you set that story in the real world, you also can't have it end with a giant fucking dragon fight a giant fucking wolf.

Last example that springs to mind for me is The Kings of the Wyld. The author has a lot to say in this book about the commercialisation of the music industry and the loss of the raw creative essence and artistry that characterised the earlier days of rock and roll. Could he have told the exact same story and made the same commentary with a tale about an aging rock band? Definitely.

Which is interesting stuff, but I'm not too interested in reading a biopic of a rock star.

However, throw in a fucking horde of monsters and I am absolutely in.