Okay so, this post has gotten enormous, even with strong effort to keep things short. So I'm breaking it up into pieces. This will mean later posts (such as your reply to me, Oofta) will be delayed. I can see no other way to keep things short.
The DM should be facilitating play, not constricting it. This does not mean that rules should be completelty discarded at every turn, but the DM should try his best to allow their players to do what they want to do within the framework of the rules.
100% agreed. My DM style is about maximum player facilitation within the limits of the rules. Hence, dig down into what players
really want, and find a way to give it to them without giving up what
you want.
Yes, though quite likely with different players[....] That said, I hope I'd be a better judge of who to invite[....]
Sure, but the question's only interesting when
something has gone wrong, and anything
vaguely "bad faith"-y instantly gets shot down. What else is there to examine the limits/challenges of "absolute authority"? If you guess right to begin with, if you're always copacetic with your group, you'll never have any issues; questions arise when you AREN'T copacetic.
IME players far more often disagree with rulings (or rules) that are to their characters' disadvantage; and after listening to what they say I-as-DM then have to try to assess whether the disagreement is a legitimate issue or just an attempt to make things easier on their characters. If it's a legitimate issue, or they can show me it's legitimate, discussion continues and I'm open to suggestions. Put another way, maybe it's losing traction because players feel more entitled to disagree?
My take - with which not everyone will agree, but that's nothing new

- is that this is a result (in D&D at least) of more and more mechanics and rules being moved to the player-side as the editions have gone along, thus causing players to see a lot more of what's under the hood.
Ironically, I agree, on all counts, save your use of "entitled." I dislike the word's implied judgment. I prefer "empowered" or "enabled."
That almost immediately verges into telling other people what to play and-or how to play it, which is a powderkeg with a lit fuse. Hard no, thanks.
So, it's okay to tell people what
not to play, but not okay to tell them what
to play? Not sure why that flies.
First question: why is a player even trying to singlehandedly introduce something on the scale[...] Second question: if this player can add in his own kingdom, do the other players then have to be offered the same opportunity? (in the interests of fairness, I'd say this is essential) Third question: where does it go from there?
1. Char's gotta come from somewhere, and no offered option quite fits.
2. Sure, though parsimony is good. If we must presume good-faith DMs, presume good-faith players, please.
3. Only as far as reasonable consensus permits.
Setting, particulary on the large scale, is the purview of the DM.
I don't see mooting the
basics of a city-state or relatively small (for the campaign's scope) region as all that "large scale." This isn't players inserting gunpowder into a Sword & Sandal game, nor doubling the size of the known world. Again: if you expect us to assume good-faith DMs, I ask that you assume good-faith players who recognize that extravagant requests are inappropriate.
e) It's a subtle power play by the player to test how easily the DM can be swayed and-or what the DM will put up with.
f) It's an overt power play by either the DM (to take or assert authority) or the player (to reject or deny the DM's authority).
Man, you
really are quick to ascribe bad-faith behavior to players. Why?
I don't want to shut down Lorenzo's player for trying something creative, but I don't want to make Alice's character redundant either. Sometimes this can be a real tightrope walk.
Aye, it can.