> The "isekai" genre (being transported to a different world, usually after dying an unfortune death) is an extreme take on this, where almost all connection to reality is removed entirely.

> Compare those stories to most (not all) modern mainstream western fiction, and you'll find that a lot of it tends to take place within our existing world instead

When people draw conclusions like this it often seems like they're making apples to oranges comparisons. Most "isekai" stuff is light novels. The appropriate comparison with stuff published in the US would might be YA books which also have lots of stuff that does not "take place within our existing world".

I think there might be some confusion about how common different types of fiction are in Japan because people are comparing US literary fiction with Japanese genre fiction because Japanese "pure literature" fiction doesn't tend to receive attention in the US, but in reality I'm not sure the US and Japanese fiction markets are that different overall.