The difference between a Monarchy and a Dictatorship is a question of tradition and the concentration of power not the line of succession. North Korea for example moved from father to son as a Dictatorship, give it 5 generations and you could call it a Monarchy.

However, even if it’s generally accepted that the child or close relative of the current leader should become the new leader there will eventually be back and forth over time between the royal family and other members of government. In theory they might have absolute authority, but in both practice and tradition there will be many informal limits.

Dictators absolutely don't have absolute power either - they have to juggle it with the military, the private sector, and so on, at the very least. In practice, the concentration of power between a dictator and a monarch is very similar. There are monarchs that hold a lot more power than the average dictators, and dictators that hold a lot less power than the average monarch (Marxist-Leninist states such as the USSR or China have their dictator share quite a bit of power to the Politburo, lower cadres, and so on, for example).

In general, monarchies pretty much have had the absolute maximum of power concentration possible without disastrous consequences.

I would say it's not even merely incentives, it's about a free people controlling their own destiny without a self-appointed father figure. Both aspects are important. Would you rather have a paternalistic boss or the freedom to choose your own destiny in consultation with your peers?