A successful DUNGEONS & DRAGONS setting is neither an authentic portrayal of medieval history nor an exercise in logical extrapolation from a fantastic premise. Instead, think of it as a medieval-flavored game environment. Your players expect to play in a world resembling the Middle Ages, but with the harsh, brutal, depressing, and serious elements stripped out. They want to explore an idealized realm of virtuous kings, shining armor, colorful tournaments, towering castles, and fearsome dragons. The setting might have its dark and challenging corners, but overall it offers a positive, escapist vision of good against evil.
Historical accuracy should be ignored when it interferes with the game’s spirit of light-hearted fun. For example, out of respect for real-world beliefs, D&D includes only imaginary faiths. Few players want to explore a genuine medieval world view, in which issues of faith dominate all thought and culture.
Nor would a strictly realistic economic system provide much entertainment. The cartloads of gold adventurers constantly haul out of dungeons is a fun game element, not a logical one. Had such vast quantities of wealth turned up in the real medieval world, its social structure would have been overturned nearly overnight. Kings and nobles held power because they were the landowners in an agriculturally based economy. Realistically, they shouldn’t be in charge in a D&D world, but they are, because they’re integral to the fantasy. Escapism trumps literal logic.
Likewise, your basic D&D world is usually a kitchen sink, using the imagery not only of the Middle Ages but also from ancient cultures across thousands of years of history. Dark Ages barbarians rub shoulders with Japanese samurai and pseudo-Egyptian priests. It mixes the elves and dwarves of epic fantasy fiction with the mighty-thewed warriors of pulp magazine sword and sorcery. If you were writing a novel, you wouldn’t want to invent a world that was merely a collection of popular clichés about the medieval and ancient periods. You would want to either evoke one particular period in a fresh and surprising way, or create an exotic place and time entirely from scratch. In a game, though, clichés are useful. They act as a kind of shorthand, making it easier for you to describe your setting in a few simple phrases and images. Your players already like and understand them. Don’t let a misplaced sense of literary snobbery get in the way of a good time.