Verisimilitude is a word used to refer to a "grounding reality" in fictional works, otherwise referred to as "consistency" in said works by many posters in this thread. It is commonly thought that a fantasy game (or any other work of written fiction) must facilitate the reader's player's willingness to suspend his or her disbelief in order to appeal to a wide audience.* Specifically, it is felt that such games must justify the existence of fantastic elements.
In order to promote this willing suspension of disbelief, a fantasy game must have some credibility. The easiest way to achieve such credibility is by way of verisimilitude — by implementing a consistent, grounding, reality to which fantatic elements prove the exception. Frex, settings like Birthright, Greyhawk, and FR achieve this through the implementation of a grounding reality modeled on Medieval Europe.
I think Wikipedia (remarkably) manages to explain it best by saying that anything physically possible in the worldview of the reader's experience (or, in this case, the player's experience) is defined as credible. Thus, the reader can glean truth even in fiction because it reflects the realistic aspects of their own existence. As that explanation suggests, what is or is not the right amount of verisimilitude depends upon the indivdiual to whom the question is put.
Some people simply desire more or less reflection in that regard, depending upon why they pursue RPGs and what the conditions of their personal existence are. There is no 'correct' level of verisimiltude. It's a matter of personal preference. Like salt on food. Some people want a lot of verisimilitude in their fantasy, while some people want very little.
*This is an important distinction because fiction does exist (as do games) that ignore this philosophy, though they tend to appeal to a comparatively small audience. It's the difference between being D&D and being Mechanical Dream or Noumenon.