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Hey, y'know why most mangas and anime released are isekai or LitRPG? Because most of the consumer base are primarily struggling single Japanese workaholic otakus in their 20s-30s whose only past time is playing video games that are mostly (West European) fantasy RPGs, who had seen better years during their high school times because back then they didn't have to pay exorbitant rents to stay in one of the most expensive cities in the world. Hence why isekai are so popular:

Because for such Japanese grown men, they know that their work life sucks, so they see themselves being the heroes of this imaginary West European fantasy land, as they get their own harem of foreign girls in the kind of setting that their familiar with. After all, seeing your self-insert becoming the villain or having to actually struggle like any other human being to get to the top would break the power fantasy, and that's no good for the average otaku, so it's better for them to get landed in a world where their gaming skills can put into use, or just have a skill no one does.

This is also why the average isekai protagonist is awfully generic, and so is the setting to boot! Are some isekai good? Yes, such as Digimon and Re;Zero, but those are very rare, and also rare are the ones that push the boundaries of the genre by either changing the setting to a brand new one or having the MCs struggle in a humanely way. Which is another major issue with isekais: The lack of humanity.

You see, most isekais are written by literal shut-ins with little to no friends whose only skill is writing, so they go and write in the Japanese equivalent of Wattpad, where there's intense competition not for good writing, but to become popular by writing the same slop that appeals to the lowest common denominator and fanboys, people of the same background as the authors. Now, this isn't necessarily a bad thing, after all it's because of such people that the art industry as a whole even survives to this day, but it can't be denied that this degrades the artistic quality of the overall genre. As a result of this literary "inbreeding", for a lack of better terms, we often don't just see the same tropes and archetypes in the same isekais are fantasies over and over, but also the same style of dialogue that befits stereotypes more than actual human beings. The end result are characters that feel more like their own species rather than actual humans.

To understand that, we need to understand how Japanese society worked in the 1990s: During high schools, students in Japan had to contact companies to get more lucrative jobs like being promised positions at a company, with the prerequisites being getting specific grades, and going to university or mill colleges in some cases and get such and such scores. This meant that students can get jobs right away once they graduate, but at the cost of personal freedom in adulthood. In other words, they had to be workaholics lest they become homeless or NEETs that rely on their parents for survival (or suicide if neither are viable options). We should also understand this within the broader context of Japanese society of that era, where it was hit with economic stagnation following the asset price bubble as a result of the Japanese government not knowing what to do with the fruits of past economic growth of the 1980s, something which Japan struggles to this day. It's also pertinent to point out that Japan then and now has been under dominant-party rule by a single neoliberal party for almost the entirety of the post-war period, meaning that most Japanese are unlikely to see any change via democratic means, and neither through revolution.

To conclude, the popularity of isekai and (west-European) fantasy genre are a sad reflections of Japanese society, where young isolated men, rather than question the establishment or fight against it to have their generation's issues addressed, would rather stagnate their creative output into the same escapist fantasies with the same tropes and settings, the settings being a reflection of their worship of European culture and aesthisthics as isekais and LitRPGs anime and manga borrow heavily from Dragon Quest RPG and the Legend of Zelda games, in turn borrow from the Euro-American TTRPG DnD, which in turn borrow from British writer J R Tolkien's LoTR books, as they see Japanese culture and that of the wider non-European world as of lesser value for any respectful re-imagining.

The popularity of isekai and west European fantasy anime/manga/light novels are thus a reflection of a Japan in a stasis, a stagnant crisis whose future generation that will lead the country can only deal with via escapism rather than through meaningful political action, for such action is impossible short of revolution in an island country ruled by the same party for decades on end since the postwar period in the backdrop of economic stagnation, rising housing costs, and an ever decreasing population creating uncertainty for pensioners and the wider economy, of which manga and anime production are part of. To put it bluntly, the modern appeal of isekai in today's Japan are symptomatic of an island country who, once a formidable colonial empire, lost its cultural momentum following the "lost decades" that followed its 1980s economic boom